The Great Taking

Great film. Great book. Great guy. (5/5)

The book contends the powers that control the financial system have prepared for a "global heist" of the assets held in all the major banks by traditional investors. But in order to succeed at that level some groundwork had to be laid. Webb was alerted to something being afoot when “in 2008 [he] noticed the first failure of a broker-dealer [Bear Stearns]… and the client accounts in this broker-dealer were encumbered in the bankruptcy estate of the broker, which never would have happened before. In all of the history of securities they were personal property." Effectively, Bear Stearns become insolvent and preference for remuneration was given to the creditors of the broker-dealer without due consideration for its clients and their stock. So Webb got to digging into how this could have happened:

In the 1990’s, Articles 8 & 9 of the Uniform Commercial Code (UCC) were changed in all 50 states to do two things:

1. Sever the traditional rights of a securities holder by granting them a new legal construct called a “Security Entitlement”, which was a weaker contractual claim in the event of their broker’s insolvency (where the legal owner was actually an entity that controls the security with a priority interest, aka a “Secured Creditor”).

2. Strip the individuality of a security so that they are all held in “Pooled Securities”, which makes them fungible. That means in the event of a broker’s insolvency regular investors now deemed “Unsecured Creditors” are only entitled to “a pro-rata share” of the aggregate value remaining after “Secured Creditors” are covered.

So that took about ten years. Here’s a propaganda piece on why the State of Florida should adopt the changes to UCC 8 & 9 published on FloridaBar.org, in January of 1998 (not surprising Florida was on the tail end of this type of change). So to re-cap changing UCC 8 & 9 removed the ability to personally own a security by prioritizing “Secured Creditors” over "Unsecured Creditors” (of course you can still sell or buy them but you merely have a pro-rata share in the event of an insolvency — you only get the crumbs if anything is left, and this applies to so called “segregated accounts” of people or institutions, which presumably would have greater protection).

“A custodian has the records who owns how much and what. But that’s it. It is the records. The system has been changed. The property itself is then transferred up to a higher level and then dealt with in pooled form.” — DRW

Webb notes, “for 400 years securities were personal property”, and the changes to UCC 8 & 9 severed that sacred right, and put it into law on a state level throughout the 90’s. The next building block in this jengatic assembly of legalese, was a change to the bankruptcy law called “Safe Harbor” which passed on a Federal level in 2005. This basically instated the "too big to fail clause" that we’re all familiar with after the financial crisis in 2008. Webb explains that while Safe Harbor sounds cuddly, what it means is “Safe Harbor for the Secured Creditors to take the client assets, even in the event of fraud.” Before the Safe Harbor came to pass the Bankruptcy Trustee had a duty to claw back any assets that had been fraudulently transferred.

Webb points out that it was the failure of Lehman Brothers in 2008 that cemented the above multi-decade march of legal adjustments into case law. Webb suggests in 2008 the financial overlords planned for Lehman Brothers to fail, to see what would happen when JP Morgan Chase (JPMC), who was both Lehman’s custodian and secured creditor, seized the assets of its clients in order to protect itself. Web says, “prior to 2005 everything that happened there would have been constructively fraudulent.” However, the legal counsel for JP Morgan argued in the Southern District of New York that their seizure of depositor funds was in the best interest of the financial system and was protected by the revised "Safe Harbor" laws established in 2005.

The court sided with JPMC and a judge issued this statement, "The transactions in question are precisely the sort of contractual arrangements that should be exempt from being upset by a bankruptcy court under the more lenient standards of constructive fraudulent transfer or preference liability.” “…the court concludes that the safe harbor laws are applicable to all claims based on preference liability or constructively fraudulent transfers.” (See pg. 5; Ctrl + F “court has concluded”.)

Webb emphasizes that the defining factor was that JP Morgan was determined an “Entitled Person”, and that not all Secured Creditors retain such privilege — it’s strictly for the mega-big banks that are “too big to fail.”

“Not all secured creditors have this power to take a client’s assets, it is only the very biggest banks that are entitled to take the client assets.” — David Rogers Webb

In the trial the judge asked rhetorically, “Is JP Morgan a member of the protected class? As one of the biggest financial institutions in the world JP Morgan is quite obviously a member of the protected class.” — Judge (Southern District of New York)

So basically it took almost thirty years of effort to enable a judge to lawfully say, “You can steal their shit.”

This event in 2008 was a foothold legal precedent that would pave the way for even greater theft according to Webb. The forthcoming part two to this diabolical financial thread, is about how David Rogers Webb contends the same type of heist that happened in 2008 is being prepared for on a global level via coordination between Central Clearing Parties (CCPs), Central Security Depositories (CSDs), and International Central Security Depositories (ICSDs). Just thinking about the acronyms gives me a headache.

Stay tuned.

Watch The Great Taking Documentary

Read The Great Taking (free .pdf download)

Buy The Great Taking (paperback version)