Citigroup Warns Customers It May Refuse To Allow Withdrawals

Citigroup Warns Customers It May Refuse To Allow Withdrawals

www.businessinsider.com

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

(visit the link for the full news article)

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.

so im not exactly sure what this means but the guys on the market thread thought it signifigant and said someone should make a thread of it and i didnt see it posted so i thought what the hell. not exactly sure what it means or what it could mean or anything but i dont imagine its a good thing...

www.businessinsider.com
(visit the link for the full news article)

That really scares me. If I got that notice from my bank, I would be long gone.

Withdraw everything before April 1st. That doesn't sound good and maybe they know something the rest of us don't.

I think it's a sign they are in trouble, big time.

This will scare a lot of their customers.

There is no need to panic. Here is an update:

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."

www.futureofcapitalism.com...

This statement will cause some to close there accounts and move there money to other banks..
Would you keep your money that you had to have for making home mortgage payments in a bank that might stop you from using that money for making those payments causing you to incur late payments.
Or would you move the money to another bank.

People, please read the update I posted. You're making too much of this.

If this isn't a sign of future problems with solvency I don't know what is.
It doesn't matter that they aren't operating on that policy today, but tomorrow you may find that the bank won't give you your money.

I think someone is trying to buy time before the debt bomb blows up.

Originally posted by ProfEmeritus
There is no need to panic. Here is an update:

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."

www.futureofcapitalism.com...

First, I was in banking for 16 years and I know a bluff when I see it. I know that this is a whole lot of whack-doodle out of Citibank because... The bank can make any accounts it wants to "eligible ... for promotional incentives."

No... Their choice to "reclassify" these accounts had everything to do with the fact that now they can freeze them at will.

[edit on 2/19/2010 by Amaterasu]

reply to post by Amaterasu


Interesting. Any other bankers out there confirm what Amaterasu is stating? To me it makes sense, nothing is done by accident.

Originally posted by Amaterasu

No... Their choice to "reclassify" these accounts had everything to do with the fact that now they can freeze them at will.

I agree - Citibank's after-the-fact explanation is a little too complicated.

...And sounds an awful lot like damage control.

Yeah, it's funny. They have never excercised this option, and never will in the future. Well, why have the option then if they will never excercise it. Sounds like a big load of hogwash if you ask me.

www.federalreserve.gov...

Federal Reserve Regulation D

This description should not be interpreted as a comprehensive statement of the regulation. Rather, it is intended to give a broad overview of the regulation's requirements. The full regulation is available on the Government Printing Office web site.

Regulation D imposes uniform reserve requirements on all depository institutions with transaction accounts or nonpersonal time deposits, defines such deposits, and requires reports to the Federal Reserve.

A general description of the regulation, by section, follows.

Section 204.1 Authority, purpose, and scope
States that reserve requirements are imposed on depository institutions for the purpose of facilitating the conduct of monetary policy by the Federal Reserve. All depository institutions, including commercial banks, savings banks, savings and loan associations, credit unions, and agencies or branches of foreign banks located in the United States, are subject to reserve requirements.

Section 204.2 Definitions
Defines key terms used in the regulation.

Section 204.3 Computation and maintenance
Sets forth rules for computing the amount of reserves that must be held and the methods for holding them. Also permits carryover of certain reserve excesses and deficiencies and specifies pass-through rules.

Section 204.4 Transitional adjustments in mergers
Points out that a merger eliminates the low reserve tranche and reservable liabilities exemption of the nonsurviving depository institution. Thus, the surviving institution faces higher reserve requirements. These higher requirements must be phased in within seven quarters following a merger.

Section 204.5 Emergency reserve requirement
Outlines the procedures for imposing reserve requirements under extraordinary circumstances.

Section 204.6 Supplemental reserve requirement
Permits the Federal Reserve Board to impose a supplemental reserve requirement of not more than 4 percent on transaction accounts, if deemed essential for the conduct of monetary policy.

Section 204.7 Penalties
Establishes a charge of 2 percentage points over the discount rate for deficiencies in a depository institution's required reserves. Also authorizes the Federal Reserve Board to impose civil money penalties.

Section 204.8 International banking facilities
Defines the rules for international banking facilities (IBFs) and sets forth recordkeeping requirements for them.

Section 204.9 Supplement: Reserve requirement ratios
Specifies the reserve ratios for net transaction accounts, nonpersonal time deposits, and eurocurrency liabilities. Also identifies the amount of net transaction deposits reservable at 3 percent and the amounts of reservable liabilities that are exempt from reserve requirements. These amounts are subject to adjustment every year to reflect changes in the monetary aggregates.

Link to Regulation D Manual

I see nothing about switching account types in this...although I haven't dug deeper yet.


[edit on 19-2-2010 by ExPostFacto]

Time to go back the the old fashioned way and have a safe at home for your valubales. Why support them and their big bounses? It you want them to fall stop using them!

here is comes..........

Originally posted by William One Sac
Yeah, it's funny. They have never excercised this option, and never will in the future. Well, why have the option then if they will never excercise it. Sounds like a big load of hogwash if you ask me.

It does sound like so much back-peddling, doesn't it?

You can almost imagine the guy who put out the original announcement taking a second look, slapping his forehead, and shouting 'What the hell have I done?!!!!'

Maybe that's when the new currency will come out LAMO

[edit on 19-2-2010 by ISHAMAGI]

Just looked through Regulation D...the entire structure is about how to move accounts to Federal Reserve Banks as a pass through bank to collect a higher interest rate off the monies in an account. With the moving of an account to these Federal Reserve banks the moving bank can decrease the size of their cash on hand. This is the reason for the warning to customers...their cash on hand may be lower than the interest formula being earned by the bank where a customer has their deposit.

Come on everyone it's APRIL 1ST! That is April Fools day.
Now all we have to do is keep our money in the banks until then and then sit back and listen to the big as their joke worked!

BTW my money is safe at home. I stopped using banks years ago.