Banksters might be able to seize your bank deposits. Yup, yours.

Cyprus is a tiny country that recently bailed out its banks by letting them seize large depositors' money. The government would have ordered the seizure of every depositor's savings, but was prevented from doing so by massive protests.

Reuters reports on who gets dinged:

Depositors with savings of more than 100,000 euros at Cyprus Popular Bank and Bank of Cyprus held at Cypriot branches will lose at least 30 to 40 percent to help pay for the bailout. 

What's frightening is that it could happen here -- or in the UK -- or in New Zealand -- or anywhere. Lawrence E. Rafferty explains:

The recent news about Cyprus banks confiscating depositor’s funds sent chills throughout the financial world here and abroad.  I couldn’t believe that the plan in Cyprus hinged on the idea that the bank could just steal customer’s funds to balance the bank’s books.  I muttered to myself when I read the story that something as crazy as that couldn’t possible happen here in the United States.  Unfortunately, I learned that the plan to pull a Cyprus type grab here was already in the works. 

“A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds. ” NationofChange  

The above article explains that most of us do not realize that when you deposit money in a bank, that it becomes the property of the bank and we become unsecured creditors of the bank! “Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.” The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price?” NationofChange

You can read the plan here. Rafferty points out that it amounts to a poorly managed bank stealing depositors' funds and forcing them to accept stock in a bank that's poorly managed.

The good news is that Congress would have to approve such a plan before the banks start seizing our savings.  The bad news -- well, you know what that is.

The idea of taking depositors' money to bail out banks has supporters in Europe and New Zealand as well. The German publication Der Spiegel reports that the Dutch finance minister said the rest of Europe should follow Cyprus's lead. He apparently wasn't alone:

Whether at the European Parliament or in several Continental capitals, many are saying that the time is ripe for the financial sector to assume a greater share of the costs for rescuing ailing banks.

In other words, they think depositors should help pay for bailouts rather than just the taxpayers.

Can you say "bank run?" As zero hedge notes,

This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one's money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?

Good question.