States are starting to move against a little-known law that could destroy your financial investments. The law, originally introduced in the 90s, was sold as a way to shore up the financial system. But in reality, it was a way to bail out big financial institutions by allowing them to use YOUR investments as collateral in the event of a financial collapse. “It could mean you lose everything,” Glenn says. “It takes the insane ‘you will own nothing’ promise to a whole new level.” One state, South Dakota, is now moving to fix this broken rule and other states are gearing up to join. Now is the time to stop this, Glenn warns, before any real economic turmoil hits.
Below is a rush transcript that may contain errors
GLENN: Okay. Have you ever seen on like your electrical cord, it will have a little yellow tag. And it will say UL. Have you ever seen that?
STU: I don't think I've noticed it.
GLENN: So electrical things, will usually have a little UL seal of approval.
That is the uniform law commission.
These are the people that make everything uniform. It is -- it's been around forever.
And I'm not saying it's a bad thing.
But they've started to go into places, where I don't really think they belong.
In the 1990s, lobbyists and big financial institutions and lawyers, at the UL commission examining. Successfully convinced lawmakers in all 50 states, to make significant changes to individual property rights.
Oh. Especially those related to investment accounts.
I want you to listen to me carefully on this.
You know, as I know, that South Korea, Iran. If they could get rockets up into the air, over the United States. And they had nuclear weapons. They could explode them, up in the atmosphere, and three nuclear weapons, would fry all of our electronics.
And it would take us at least a year to get back on our feet.
If it happened globally, it would be a disaster. And millions and millions would die.
Millions would die here in America.
Now, this is something that insular understand.
We've never really hardened our electrical grid.
We've hardened the government.
But the government has never spent the money to harden the rest of us.
I think that's kind of important.
I wouldn't mind spending some time and money, on hardening the grid.
We have our grid falling apart, it is a low probability that that would happen.
But just astronomically high consequences.
This is the same kind of thing, except I think it's more likely than an EMP. But it is worth paying attention to, because it is catastrophic to you.
The changes in the state codes, in the 1990s, were justified by banks and other financial institutions.
By appealing to shoring up the financial system, and moving away from the heavy use of paper, such as paper stock certificates.
In reality, what this did, was it was a design, to bail out big financial institutions, especially banks.
In the event of a future financial crisis. All at your expense.
Here's how it worked.
States changed article eight of the uniform commercial code.
A state law passed in all 50 states.
So the investment intermediaries.
Now, who is an investment intermediary.
Well, that would be like fidelity. Or Merrill Lynch. Or anybody who you were buying your stocks from, you don't actually hold the stock.
They own the actual stock. And they're holding it, on behalf of you.
So this change means, that you, the purchaser, don't actually own your investments.
The stockbroker, or the intermediary does. This rule applies to stocks, to bonds. To mutual funds.
Exchange traded funds. And other common forms of investment.
Including investments held in retirement accounts. Such as 401(k)s, or IRAs.
What does this mean.
Well, hopefully, nothing.
However, if you believe the banking system is weak.
If you believe that you could see a major shift with a catastrophic black swan, hmm, it could mean you lose everything.
It -- it takes the insane, you'll own nothing promise, to a whole new level.
Now, the changes didn't stop there.
The code also allows for these stock brokers and other intermediaries, holding your investment. Now, see if this sounds familiar. To use them as collateral in their own financial agreements.
So it's like getting a loan, from a bank, using your neighbor's car. No.
If I don't pay it. Then just take my neighbor's car as collateral.
Says the neighbor.
And he does it, because he parks your car in his driveway occasionally.
So if you don't pay the loan back, the bank gets to take your neighbor's car.
That's what this is, except the car, is your investments.
Everything that you've worked so hard for.
The reason why this is so dangerous, is if the intermediary goes abrupt, the stock you think you own, can be taken by another big financial institution, who is owed money by that bankrupt stockbroker. And they'll take your fund, to cover it.
Let me give you an example. This is hypothetical. Imagine you contact a stockbroker.
Or maybe your investment manager does it for you.
You purchase 100 shares of stock in Tesla. After you pay the price of the shares, the broker fees. The broker then would add those 100 shares of Tesla to your account.
I own 100 shares of Tesla.
But you don't.
The stockbroker does. Then he can turn around, and use those shares, as collateral, in his own financial agreements, with larger institutions.
So now imagine, that your stockbroker, let's say it's Fidelity. Goes bankrupt.
But there's no rumor of that happening.
Okay. I'm not bringing this up. Because there's anything happening.
I'm bringing this up, because you should know this.
Imagine Fidelity goes bankrupt, because of a massive financial crisis.
Not that that could ever happen, right?
Never happen. If Fidelity owns money, to say Bank of America.
Bank of America could take your 100 shares of stock, as well as a whole bunch of other people's investment, as payment for the debt, that your stockbroker owns -- owes to Fidelity.
If you're lucky, you'll get table scraps in bankruptcy court.
That's the problem.
Is it real.
What do you do about it?
Well, the first state is now fighting back on this.
And it's South Dakota.
More help is needed. If the financial system ever crashes again, then everything will probably be fine for you and your investment.
But if it does crash, tens of millions of Americans, could be at risk of losing all of their investments.
Including what's in their 401(k) or IRA accounts. Here's the good news.
Monday, South Dakota law makers introduced a House bill, 1199.
This will rewrite the commercial code in South Dakota. So that you get to keep ownership, of what you own, in investments, regardless of whether you used an intermediary like Fidelity or Merrill Lynch.
That is yours.
Now, the bank lobbyists are hating this. Financial institutions, are hating this. And they're pushing hard in South Dakota. Kristi Noem is still looking at the issue. If the bill passes in South Dakota, it will be the first step towards fixing this broken system in all 50 states. But it must be addressed. It must be addressed.
This isn't the only thing. They have changed a lot of the banking rules. The Barney frank. Remember Barney frank.
You know. And they did this big investigation.
So what happened in 2008.
Except, they didn't do an investigation.
They just all got together and said, well, we will fix it this way.
Well, wait. What caused it?
We will fix this, this way. And they put a lot of things like this. Into your bank.
Read your bank contract, carefully. Paragraph so legislators are already working similar bills in other states.
We are watching, and they are watching, what's happening in South Dakota closely.
We need states to make these changes now.
Because, we know the financial system is not the picture of health.
No matter what Joe Biden or anybody else tells you. If it collapses, with the current laws in place, it could mean that American families will end up getting crushed.
All to protect the big banks. And the billion dollar institutions.
Now, that doesn't sound like part of the game plan for the WEF at all, does it?
Uh-uh. Pensions and government funds, could end up getting caught in this crisis as well. Now is the time to stop it. Because there is no crisis.
Now is the time to, you know, harden the infrastructure. Just in case. You harden it, and you don't have to worry about it.
You hear the threat, and you don't do anything about it. Then when things get dicey, you constantly worry about it.
In South Dakota, call your lawmakers. House bill 1199.
Check that bill out, give it to your own lawmakers in your own state.
We've got to protect your investments.
The problem with '08 is nobody was paying attention to you.
Everybody else got bailed out. With your money.
We're still paying, for what they've given, not just to the banks. Not just to the big businesses.
But to the entire world.
They took our money, and gave it to people, they thought deserved it.
You didn't get anything.
Except, the bill.
We have to do this, before there's an issue.