FDIC Second-in-Command Resigns Abruptly

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Interesting and abrupt...

From: Global Messenger
Sent: Thursday, September 30, 1999 3:05 PM
Subject: Message from the Chairman

September 30, 1999

TO: All FDIC Employees
FROM: Donna A. Tanoue
SUBJECT: Management and Organizational Changes

Deputy to the Chairman and Chief Operating Officer Dennis F. Geer recently advised me of his intention to retire on September 30, 1999. I have asked John F. Bovenzi, currently Director, Division of Resolutions and Receiverships (DRR), to serve as the new Deputy to the Chairman and Chief Operating Officer, effective tomorrow. I have also asked Mitchell Glassman to serve as Acting Director of DRR while we seek a permanent replacement for John in that position.

John has served the Corporation with distinction in a series of increasingly responsible positions since 1981, as an economist, policy analyst, advisor and senior executive. Over the years, he has continually won the confidence of Chairmen, other members of the Board, and FDIC staff. I will rely heavily on John's talent, expertise, and experience as we work together to assure the Corporation's continuing success in maintaining public confidence.

In conjunction with this management change, I have also decided to modify certain reporting relationships. Beginning tomorrow, the Division of Resolutions and Receiverships and the Division of Administration will report to Chief Financial Officer Chris Sale, who will become Deputy to the Chairman and Chief Financial Officer. The Office of the Executive Secretary will report to General Counsel William F. Kroener. All three of these organizations currently report to the Deputy to the Chairman and Chief Operating Officer.

In closing, I want to express to Dennis Geer my personal appreciation for his wise leadership and counsel since I became Chairman. He retires with over 27 years of Federal service and has served with distinction in a variety of senior positions at the FDIC and the Resolution Trust Corporation (RTC) for the past eight years. In his five years as Deputy to the Chairman and Chief Operating Officer, he has dealt successfully with a broad range of difficult challenges, including the FDIC-RTC transition and the downsizing of the Corporation. During his tenure, no one has contributed more to the Corporation than Dennis. We have all benefited-and will in the years to come continue to benefit-from his work. I know that I express the feelings of the entire FDIC workforce in wishing Dennis the very best in his retirement.

-- FDIC Anon (anon@x.yz), September 30, 1999



-- Jim the Window Washer (Rational@man.com), September 30, 1999.

Jeff Gordon's crew chief announced he was "outta there" today too. Curiouser and curiouser....

-- LiarLiar (Pants@Fire.ouch), September 30, 1999.

He knows that there are going to be an awful lot of angry customers looking for someone to hang by the balls when they discover that their $100,000 insurance is a fraud. As a Chief Executive Officer he can be held liable. Smartest thing to do is strap on the golden parachute, charter a flight to Costa Rica and JUMP!

-- @ (@@@.@), September 30, 1999.

Hey - they forgot the part about "He wants to spend more time with his family...in their bunker"

-- a (a@a.a), September 30, 1999.

And remember -- look in Gary North's site -- that YOUR records of your bank account don't mean diddly. Only the BANKS' records count. And if their records are hosed, you are SOL.

Withdraw early and withdraw often. About 90 days and counting.

-- A (A@AisA.com), October 01, 1999.


What I meant to imply by saying that the people would discover their money wasn't insured was of course the pre-condition that there would first either be enough bank failures to bankrupt the FDIC insurance coverage, or that they would not like the idea that their records are not considered valid.

I doubt that this guy is just retiring without having some knowledge to this effect, particularly when he did it so suddenly. It's seems likely to me anyway that he could have his Y2K escape planned and wants to disappear without giving anyone time to ask a lot of questions.

-- @ (@@@.@), October 01, 1999.

Check out this excerpt from Gary North on FDIC insurance. Basically when it comes to proving your legal claim to monies in your bank account, only the records hald by the bank (NOT you!) are legally binding. So the song and dance about retaining a couple months of bank statements is bogus. In a crisis like 1929, we'll be at the mercy of those holding the purse strings...again! Refereces here are directly from the FDIC Regulations Web Site!


I have already explained this to REMNANT REVIEW subscribers in the July 2 issue. Here, I want to follow up on some of the implications.

The U.S. government from the beginning has dismissed Y2K as a minor problem with mild consequences: the 72-hour hurricane. Mild consequences call forth inexpensive answers. Problems that produce mild consequences are ignored by most people.

What are the likely consequences of Y2K for banks? According to the government, hardly any. But, just in case, we are told to keep good records. This means we should keep our bank receipts. That's all? Yes.

The Federal Deposit Insurance Corporation is a government agency, or at least a quasi-government agency. It has a Web site with .gov ending its address. On the FDIC site, the Y2K-concerned reader is told this:

"As always, keep good records of your financial transactions, especially for the last few months of 1999 and until you get several statements in 2000."


Why should we keep good records? We are not told. It is implied by the FDIC that these records will get you your money on any account up to $100,000. Well, they won't -- not according to the FDIC's own rules. Read Section 330.1 from the pertinent FDIC Web page. Pay close attention to the words, "books and records of the insured institution." They are not your books and records. Here is what you possess: "account statements, deposit slips, items deposited or cancelled checks." These are specifically exempted as evidence. Here is the text:

330.1 Definitions. For the purposes of this part:

(e) Deposit account records means account ledgers, signature cards, certificates of deposit, passbooks, corporate resolutions authorizing accounts in the possession of the insured depository institution and other books and records of the insured depository institution, including records maintained by computer, which relate to the insured depository institution's deposit taking function, but does not mean account statements, deposit slips, items deposited or cancelled checks.

[Codified to 12 C.F.R., 330.1]

[Section 330.1 amended at 58 Fed. Reg. 29963, May 25, 1993, effective December 19, 1993; 63 Fed. Reg. 25756, May 11, 1998, effective July 1, 1998]

You can verify this by clicking through:


This is also spelled out in detail in the FDIC booklet for banks, "Financial Institution Employees' Guide to Deposit Insurance" (Fall 1996):

For the purpose of determining legal ownership of accounts, deposit account records do not include: Account statements, Deposit slips, Items deposited and cancelled checks.

Are you getting the picture? The FDIC has soothed the fearful hearts of Y2K-aware depositors by telling them that all they need to do is keep good records. But these records have no legal status. What has legal status are the records of the banks. Problem: the computers are non-compliant. If your bank's computer will not give access to your accounts' records, you are left without recourse. Your account is closed. You cannot get your money. The FDIC owes you nothing. It only owes the bank that paid its FDIC insurance premiums.

What we have here is deliberate deception. The FDIC knows exactly what it's doing. It is calming the public by means of a false hope. It is trying to head off a bank run that will bankrupt the FDIC. It is a self-interested party that is misinforming the depositors.

The depositors know nothing about all this. This information is buried in the FDIC's regulations. The press has not picked up the story, even though I published it, with the full documentation, on July 2. I have not received any inquiry from the press on this matter. The press is not going to break ranks with the banks. The government's greatest Y2K fear today is that there will be a run on the banks. The press will not risk creating a bank run by exposing this chicanery.

All digital money is at risk. The risk is so great that the FDIC is playing games with the public. This means that all forms of capital that derive their present value from markets based on digital money are also at risk.

-- Mike Freed (mikefr@cs.misw.com), October 01, 1999.

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