WASHINGTON – With the United States facing a $17 trillion debt and an acidic debate in Washington over raising that debt limit on top of a potential government shutdown, Congress could mimic recent European action to let banks initiate a "bail-in" to blunt future failures, experts say.

Previously the federal government has taken taxes from consumers, or borrowed the money, to hand out to troubled banks. This could be a little different, and could allow banks to reach directly into consumers' bank accounts for their cash.

Authority to allow bank "bail-ins" would be in lieu of approving any future taxpayer bailouts of banks that would be in dire need of recapitalization in order to survive.

Some financial experts contend that banks already have the legal authority to confiscate depositors' money without warning, and at their discretion.

Financial analyst Jim Sinclair warned that the U.S. banks most likely to be "bailed-in" by their depositors are those institutions that received government bail-out funds in 2008-2009.

TRENDING: Franklin Graham to lead prayer march in D.C.: 'Only hope for our country is God'

Such a "bail-in" means all savings of individuals over the insured amount would be confiscated to offset such a failure.

Get "I Want Your Money" and find out what may be coming to your neighborhood.

"Bail-ins are coming to North America without any doubt, and will be remembered as the 'Great Leveling,' of the 'great Flushing' (of Lehman Brothers)," Sinclair said. "Not only can it happen here, but it will happen here.

"It stands on legal grounds by legal precedent both in the U.S., Canada and the U.K."

Sinclair is chairman and chief executive officer of Tanzania Royalty Exploration Corp. and is the son of Bertram Seligman, whose family started Goldman Sachs, Solomon Brothers, Lehman Brothers, Bache Group and other major investment banking firms.

Some of the major banks which received federal bailout money included Bank of America, Citigroup and JPMorgan Chase.

"When major banks fail, they are going to bail them out by grabbing the money that is in your bank accounts," according to financial expert Michael Snyder. "This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the Western world."

Given the dire financial straits the U.S. finds itself in, these financial experts say that Congress could look at the example of the European Parliament, which recently started to consider action that would allow banks to confiscate depositors' holdings above 100,000 euros. Generally, funds up to that level are insured.

Finance ministers of the 27-member European Union in June had approved forcing bondholders, shareholders and large depositors with more than 100,000 euros in their accounts to make the financial sacrifice before turning to the government for help with taxpayer funds.

Depositors with less than 100,000 euros would be protected. Considering protection of small depositors a top priority, the E.U. ministers took pride in saying that their action would shield them.

"The E.U. has made a big step towards putting in place the most comprehensive framework for dealing with bank crises in the world," said Michel Barnier, E.U. commissioner for internal market and services.

The plan as approved outlines a hierarchy of rescuing struggling banks. The first will be bondholders, followed by shareholders and then large depositors.

Among large depositors, there is a hierarchy of whose money would be selected first, with small and medium-sized businesses being protected like small depositors.

"This agreement will effectively move us from ad hoc 'bail-outs' to structured and clearly defined 'bail-ins,'" said Michael Noonan, Ireland's finance minister.

The European Parliament is expected to finalize the plan by the end of the year.

The purpose of this "bail-in," patterned after the Cyprus model, is to offset the need for continued taxpayer bailouts that have come under increasing criticism of the more economically well-off countries such as Germany.

Last March, Cyprus had agreed to tap large depositors at its two leading banks for some 10 billion euros in an effort to obtain another 10 billion European Union bailout.

While this action prevented the collapse of Cyprus' two top banks, the Bank of Cyprus and Popular Bank of Cyprus, it greatly upset depositors with savings more than 100,000 euros.

WND recently revealed that the practice of "bail-ins" by Cyprus a year ago was beginning to spread to other nations as large depositors began to see their balances plunge literally overnight.

A "bail-in," as opposed to a bailout that countries especially in Europe have been seeking from the International Monetary Fund and the European Union, is a recognition that such outside monetary injections won't be forthcoming.

Sinclair said that the recent confiscation of customer deposits in Cyprus was not a "one-off, desperate idea of a few Eurozone 'troika' officials scrambling to salvage their balance sheets."

"A joint paper by the U.S. federal Deposit Insurance Corporation (FDIC) and the Bank of England (BOE) 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, and that the result will be to deliver clear title to the banks of depositor funds," Sinclair said.

He pointed that while few depositors are aware, banks legally own the depositors' 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," Sinclair said.

"But until now, the bank has been obligated to pay the money back on demand in the form of cash," he said. "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," Sinclair said, "we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills."

Such plans already are being used, or under consideration, in New Zealand, Poland, Canada and several other countries.