this just proves there is no real benefit to regulation until traders accounts are insured against these shenanigans like SIPC or FDIC. Only then will "NFA" be seen as a competitive advantage/a good thing.
NO! The FDIC was created to relieve depositors' anxiety with regard to placing their monies in Chartered Banks following the numerous bank failures of the 19th & early 20th centuries. The SIPC was created to assure some modicum of protection for those who dealt with securities firms that failed or committed fraud. Neither were put in effect to enable or immunize crooked operators and insulate completely happless investors.
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Unlike commercial banks whose primary business revolves around making secured and unsecured loans over time, involving considered judgements on the creditworthiness of borrowers where a measure of risk is assessed in good faith and where failures can occur due to bad judgement,
Custodial Banks like US Bank Corp (as in this case), State Street Bank, NY Bank Corp, Mellon Bank, etc., these banks' Custodial Banking Services are presumed to be largely a riskless business activity. Gobs of "Free Money on Deposit" and we can charge fees too! The warehousing of secuities (pieces of paper), of gold, diamonds, and other precious commodities; the holding of cash, the clearing of bank transactions with other well capitalized firms, the transfer of currencies in physical form, and and the instantaneous electronic transfer of funds from bank-to-bank, or other qualified ACH entities. So First for these entities, all the profits and the capital of the Custodial Bank should be held at risk against any Custodial banking shortfalls, for the failure to fulfill their primary legal fiduciary responsibilities that are at the heart of Custodial Banking.
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The legal standard is, or should be:
The Custodian shall be required to know, or shall have been reasonably expected to know the true condition of the firms for whom they act as a Custodian at all times. If this were the actual case and so enforced, the Bank and its bankers would be in, on, over, and under those firms whose money they hold. If they knew that literally their firm's and their personal licensure, their careers, their personal assets, their life, plus the assets backing their shareholders' valuation, and their bondholders' principal were all truly at stake before even a single dime of federal guarantee funds would be forthcoming from the taxpayer; believe me, this could not, and would not have occurred.
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For those of you who will assert: Oh, the FDIC and SIPC funds come from fees paid by their member firms! I say, those fees are simply passed through to the retail customers, who not only are the ones who prima facie remain at risk even after paying this bill, but are also expected to ulitimately fund the cost of the entire industry's insider malfeasants. When those pidling, window-dressed SIPC and FDIC buffer funds are depleted, it remains the US Taxpayer who is on the hook to back the system and its banks with unlimited funds, now being borrowed in truckloads from still willing international lenders. US taxpayers remain unwilling to stare reality in the eye. But for how long can this continue?
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Be it also known: The worst disasters likely still lay ahead. Ex.: Whenever you hear of a vulture firm descending upon some wounded corporate carrion, ripping its flesh, exporting its jobs and underlying businesses, firing its workers, busting its unions, draining its treasury, raiding its Pension fund, and then driving it into bankruptcy; remember it is the the US taxpayer backed by the PBGC (Pension Benefit Guaranty Corp) that is unloaded upon. This woefully underfunded government insurance plan must then slash payee benefits, and dump the remainder of underfunded future costs upon the US Treasury, while the corporate raider buys a few more Cadillacs for his wife, drops a dime in the collection box, and rides off into the sunset on his jet ski on a sunny New Hampshire lake.
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When this garbage balloon pops, it will surely make these escapades seen today look like mere chicken scratch.