By Mark David Blum, Esq.
I learned this morning that a writer should only begin a sentence with the word “I” when he has been shot in the groin.
The other day I learned that Central New York Banks are out of money.
No, I am not crying ‘wolf’ lest I should end up as wolf chow; according to a well known writer and friend. I was standing in line at my bank and heard the bank tell a customer they did not have “that kind of money” around. Being the nosey busybody I am, based on what I heard and learned, the following is a true story.
A man walked into a bank with a $9,000.00 check drawn on that bank. Apparently he got the check a while ago but was sitting on it until he found a used car he wanted. So, he went to the bank to cash the check to take the cash to the seller of the automobile. The seller would not take a personal check for the transaction. Would you?
The teller and later the bank manager told the customer they cannot cash the check. Even I was taken aback to hear that the bank does not have that kind of money around. (I also pondered how to snatch his bag as he walked out). Watching employees call five different branches of the bank, it was obvious that the man was not going to get his money. In the end, he dumped the check into his savings account and was told he could not get that kind of cash for ten days. His last words were that he hoped the car was still available then.
When my turn came, I began to inquire of the teller about what I just witnessed. I asked point blank whether my bank was broke. They assured me the bank was solvent but that they do not order large amounts of currency anymore. This is for two reasons: One is that given the current economy, people are not withdrawing money like before. Apparently Americans are broke. Secondly, the bank fears that given the current economy, there will be more robberies and the bank wants to protect its’ assets.
So I asked how much cash I could get on one day. I was told just a couple thousand dollars. Any amount more would require the bank to special order the cash. I was flummoxed. As I jabbered away with the teller and others, I learned also that given savings accounts are paying less than 1%, it’s almost better to withdraw all your money. They recommended money market accounts and I inquired whether they have paid attention to the market lately.
It seems to me that if my bank is paying such a low interest rate, then my bank is saying it doesn’t want me to save. In doing so, the bank is conveying an attitude to spend spend spend; or at least make long term investments in the market.
At the same time I hear about a bank called IndyMac that was overtaken by Federal Regulators. During that experience, I learn that notwithstanding the “insured” accounts of $100,000.00 or less, that in reality, the Federales are going to reimburse depositors only five cents on the dollar. These same news stories contain implications that there are other banks on the brink of failure.
If it is going to take ten days to make a major cash withdrawal and it must be specifically requested, then the time to do so is now. With savings interest rates so low and bank profits being so low and cash on hand being so low, something is rotten in Denmark.
Unfortunately I am neither economist nor financial wizard and my speculations are my own. But as one of the ignorant few, I have to confess I fear for the health of my banking system. Banks that cannot come up with more than a few thousand dollars for customers do not appear sound. Of course, this could all be a lie and it’s really a mandate from the government that nobody can remove large amounts of cash from the bank without the bank reporting same to the government. Is that the stench of the Department of Homeland Security I smell?
Well, I too am tempted to have the bank order all the cash in my savings accounts. I should not dare to be caught empty handed when the banks fail or if I need the money to buy a used car. Five cents on a failing dollar is meaningless. I want my money someplace safe. Don’t you?