CITIBANK warning ! What do they know ???

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Submitted by HLS on April 23, 2010 - 10:40am

I cannot believe this... what's next ??

I have received CITIBANK statements from a loan applicant. After looking at the last 12 months, I noted that the following warning/advisory was only on the Feb 2010 statement, not on any other months.
It was in a bold prominent box all by itself:
********************
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.
*********************
This has been a condition for savings/money market/cash withdrawls in the past, but NEVER on a checking account.

WHY would they have this warning ?
WHO allows that they only have to disclose this on ONE statement over the past year.

The implication is that you need to request permission 7 days before delivering a check to have access to YOUR money. It is not clear whether they can deny your request.

Perhaps someone is expecting either a run OR collapse of banks. Is this single month "disclosure" scary ??
More govt regulation to "protect" consumers ?

Has anybody seen this warning/disclosure from any other bank ?

There are some great minds on this site.
What say ye ??

Submitted by SK in CV on April 23, 2010 - 10:49am.

According to 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.

Submitted by HLS on April 23, 2010 - 10:59am.

Technical Requirement my foot.

FDIC is BROKE. AN insurance fund with ZERO is insuring about 6 TRILLION dollars of bank deposits.
Not to worry, the federales have given them a $500 BILLION dollar line of credit to instill a false sense of security.

FDIC coverage is only unlimited for certain business accounts, not personal checking.

I suppose if the CITIBANK disclosure said:
We are BROKE and may not have the funds to honor a check that you write using funds that you have deposited with us. IF you give us 7 days notice, we will do our best to figure out a way to get the money... it wouldn't look so good.

This is the classic disclosure. If we didn't have a problem, we wouldn't have a problem.

Submitted by denverite on April 23, 2010 - 12:32pm.

As I recall, many similar restrictions were being placed on bank accounts at the height if the crisis in late 2008.

Submitted by SD Transplant on April 23, 2010 - 12:37pm.

are we to expect another leg down in the market crisis...perhaps

Submitted by HLS on April 23, 2010 - 7:54pm.

http://finance.yahoo.com/news/FDIC-shuts...

Yawn... what's another $974 MILLION when you're already broke.....
57 bank failures so far this year, not even one-third into the year.

Submitted by CA renter on April 24, 2010 - 12:40am.

Good catch, HLS. I'm with you on this...something might be up.

Submitted by Effective Demand on April 24, 2010 - 6:14pm.

HLS wrote:

********************
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.
*********************
This has been a condition for savings/money market/cash withdrawls in the past, but NEVER on a checking account.

WHY would they have this warning ?
WHO allows that they only have to disclose this on ONE statement over the past year.

It's an accounting thing, if they do this they get to say they have higher reserve level because they can technically have access to all of their checking accounts funds for seven days and that changes how you calculate your reserves. The technical term is they are reclassifying their Demand Deposit Accounts to NOW ("Negotiable Order of Withdrawal") accounts.

This would actually allow them to leverage up and make more loans and extend more credit.

It isn't nearly as sinister and a warning from the market as some here are making it out to be.

Submitted by Casca on April 25, 2010 - 11:30am.

Evidently they've forgotten the meaning of a "demand deposit".

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