$C U Next Tuesday at the Citi Bank Run!
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.
C U Next Tuesday blames it on Regulation D, which smells like a cop out to JDA but who am I to judge?
"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."
LOLFed elaborates on C U Next Tuesday's latest parlor trick:
So, the end result is suddenly, now, most Citi checking accounts have suddenly become NOW (negotiable order of withdrawal) accounts. Okay, what does that mean?
Well, that makes them deposit accounts on which you just happen to be able to write checks, which is not the same as a typical demand deposit (checking) account. And so, now, they’re subject to Regulation D. Usually, when banks structure checking accounts as NOW accounts it’s just so they can pay customers (a pittance in) interest, but something tells me $C is not doing this out of the goodness of its heart and falling all over itself to pay interest to its checking customers.
If you recall January 2008, C U Next Tuesday started placing limits on NY ATMs under the auspices of increased "fraud" activity. Oh that's precious. What's next? Bank holidays? This recession RULES!!
(original via Future of Capitalism)