The latest reason not to trust bankers
Citigroup Warns Customers It May Refuse To Allow Withdrawals
John Carney | Feb. 19, 2010, 2:57 PM
The image of banks locking their doors to keep customers from making withdrawals during a bank run is what immediately came to mind when we heard that Citigroup was telling customers it has the right to prevent any withdrawals from checking accounts
for seven days.
“Effective April 1, 2010, we reserve the right to require (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,” Citigroup said on statements received by customers all over the country.
What’s going on? It seems that this is something of an error. The seven day notice policy only applies to customers in Texas, Ira Stoll reports at The Future of Capitalism. It was accidentally included on customer statements nationwide.
“Whatever the explanation, it doesn’t exactly inspire confidence in Citi,” Stoll writes. “But it’s hard to believe a bank would be sending out a notice like that on its statements.”
Ira Stoll’s Future of Capitalism article says this:
Seen on a recent Citibank statement: “Effective April 1, 2010, we reserve the right to require (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.”
Whoa. Is this an April Fool’s joke? A contingency plan to defend against the idea of what “would happen if thousands of [bank] customers pledge to withdraw their money from the bank on a certain day, unless the bonuses are capped?” A strategem cooked up by Citi’s new shareholders from the hedge fund industry, an industry in which such withdrawal gates are common? An idea backed by Citi’s big shareholder, Uncle Sam, or one of its regulators, Sheila Bair?
I called Citi about it and they said the warning applies only to customers in Texas and that the notification had been mistakenly included on statements nationwide. Whatever the explanation, it doesn’t exactly inspire confidence in Citi. I’ve got nothing against Citi as a general matter — I have friends who work there, and know some account holders who are generally satisfied customers. But it’s hard to believe a bank would be sending out a notice like that on its statements.
Update: Citibank has now released the following statement by way of explanation: “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.”
Yeah RIGHT. IMO, folks would be well served to pay attention to whatever financial benchmarks they hold dear. I cant say what those would be, because I am not conversant in money matters. That said, I have long distrusted banking, bankers and credit lenders because of all the concessions they lobbied for (and got) under the nightmare that was the Bush Administration. In a nutshell, I DONT TRUST EM. I pay attention to watchdog sites and trust my gut. Better safe than sorry eh?
Its ALL Blarney!! 