Tuesday, March 02, 2010

Time to start thinking seriously about money in the mattress?

Citibank's recent notice to customers is causing quite a rucus across the spectrum:
“Effective April 1, 2010, we reserve the right to require seven (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”

People are wondering whether this is their way of getting ready for a potential run on the bank due to a major depression around the corner.

Here's a statement from Citibank:
“When Citibank moved to unlimited FDIC coverage in 2009, we had to reclassify many checking accounts to allow for immediate withdrawals in order to ensure all customers qualified for the additional coverage. When we moved back to standard FDIC coverage with most major banks in 2010, Citibank decided to reclassify those accounts back to make them eligible again for promotional incentives. To do so, Federal Reserve Reg D requires these accounts, called NOW accounts, to reserve the right to require a 7-day notice of withdrawal. We recently communicated this technical requirement to our customers. However, we have never exercised this right and have no plans to do so in the future."

I gather from some limited reading that the rule / law this is based on goes back to the 30s, and that it was expanded in 2006 to include on-line banking.

Cape Bank in New Jersey also has a similar notice on their site:
The Bank reserves the right to require you to give seven (7) days prior written notice to the Bank of an intention to withdraw. This requirement is in accordance with Federal Regulations and payment by the Bank without requiring the seven (7) days notice does not constitute a waiver by the Bank of the right to require the notice. http://www.capebankonline2.com/site/account_agreements.html


A lot of folks have huge concerns about the status of their money in banks. You can't turn on the television or the radio without hearing an advertisement for gold or silver it seems.

Who hasn't experienced a problem with trying to get their money out of a bank? My sister recently received a large check from her insurance company as a result of flood damage. She had workers fixing her house, getting it "livable" again. The bank put an extensive hold on her check, which had already been delayed due to normal insurance procedures.

Some banks now require that you pay a fee to cash a check written on their bank if you're not a customer. I kid you not. My son took a check to the bank it was written on wanting to cash it rather than deposit it in his account at another bank. They wanted $6 to cash it. When he pitched a fit about paying they said he could open up an account for $6. If he closed the account within a specified time they'd take the money. He finally opened an account when they gave him a $100 incentive to open an account (again, the money had to stay there). The catch? He had to make a certain number of transactions and keep a minimum balance. At the end of his 3 months he's outta that bank.

I read recently that the powers that be in Washington are looking at our IRAs and 401ks. They're thinking about taking the money, using it and then doling it back out to us. Not sure how that one will fly, but it is rather scary thinking that the government is eyeing the billions we have in our various savings plans.

Most, if not all, banks have a cap on how much money you can withdraw via an ATM during a day or over a period of time. From scanning it looks like it's $1,000 per day or $2,500 in a 7-day period.

With banks failing all over the place, the government taking over many, the uncertainty of our financial stability and the very intrusive regulations by the banking system and the government, maybe it is time to consider taking our money and putting it under the mattress.

What do I think? Do your research and keep a close eye on things. Make contingency plans but don't panic.

Update: Citigroup Says Feds Ordered 7 Day Restriction On Bank Withdrawals
http://dailypaul.com/node/126537
A new advisory being sent by America’s third largest bank to its account holders has stoked fears that major financial institutions could be preparing for old fashioned bank runs if the economy takes a turn for the worse.

http://www.datehookup.com/Thread-421559.htm
http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/int_depos.pdf

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