Citigroup Warns Customers It May Refuse To Allow Withdrawals

[Bob Hubbard]

http://www.businessinsider.com/citigroup-warns-customers-it-may-refuse-to-allow-withdrawals-2010-2

"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.

Interesting read.

 

[KELLYG]

"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 [COLOR=#1d637d! important][COLOR=#1d637d! important]accounts[/COLOR][/COLOR] 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, [COLOR=#1d637d! important][COLOR=#1d637d! important]Citibank[/COLOR][/COLOR] 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'm thinking that they changed all the NOW accounts to checking accounts so that clients could have immediate access to their funds in essence turning them into checking accounts. I think that they reconverted these accounts back to NOW accounts which can require a 7 day waiting period. NOW = Negotiable Order of Withdraw account. These accounts are on the same order as Money Market Accounts but allow more frequent withdraws that a Money market account with out acquiring fees.

Interesting stuff indeed.

 

[Makalakumu]

Looks like the secret is coming out.

 

[jks9199]

Why does it sound like they were prepping for a run on the banks?

 

[Bob Hubbard]

Because a memo went out last year that the gov might close all the banks for an undetermined amount of time. There's a thread here somewhere on it.

 

[wushuguy]

time to make some withdrawals now while it's possible. ... kiss good bye to atm convenience!

but is this 7 day notice just for withdrawals like atm, or does it count for any way money might leave the bank... wire transfer, automated bill payment, etc?

 

[CanuckMA]

Kellyg has it right. It's for a certain of accounts. Last year they converted those accounts to regular checking fot the unlimited FDIC coverage. They are now converting them back to NOW, and are advising their customers that the 7 day rule is again in effect.

Sounds like much ado about nothing.

 

[Big Don]

Wouldn't that be, eh, theft?

 

[Deaf Smith]

If I was you guys I'd keep some money handy. No, not a bunch of $1000s but enough to keep you going for a while. And might even get a safe depost box and put cash in it (yes $1000s!!!) I don't think when a bank closes their doors it includes locking up your deposit boxes (but I might be wrong.)

But that way you could pay bills for a month if need be in cash.

Deaf

 

[Makalakumu]

Kellyg has it right. It's for a certain of accounts. Last year they converted those accounts to regular checking fot the unlimited FDIC coverage. They are now converting them back to NOW, and are advising their customers that the 7 day rule is again in effect.

Sounds like much ado about nothing.

Or, in other words, they've moved money market accounts into a different ledger and will issue more/different kinds of loans with the money. It sounds like a sneaky gimmick to jumpstart the flow of debt/money with the hope of stimulating the economy.

Also, FDIC is effectively going bankrupt. It can't continue to cover money market accounts that may be facing losses...

 

[KELLYG]

Just my impression of the thing. If you had 500k in the bank, before the fed raised the limit from 100k max insurance to 250k insurance you would have to have the 500k in 5 different banks to be covered by FDIC. When it was raised the client may have wanted to consolidated the funds into fewer banks. I'm under the impression that it was done so that the bank's client could move their moneys around with out the hassle of waiting 7 days to obtain funds and 7 days before the funds are available for them to use. The NOW account has always had the 7 day stipulation but it was relaxed at one point, the banks are now unrelaxing the rule.

 

[terryl965]

G;ad I do not bank with them

 

[Phoenix44]

Well, then, sounds like everyone's got 5 weeks.

BTW, Consumer Reports is asking for comments from people who've had trouble making withdrawals.