US, Greece banks to set cash limits; bank run imminent?

northern rock bank run 2007

northern rock bank run 2007

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts.

Contrary to financial pundits’ constant chants and cheerleading with the false claim tha the “recession is over,” we see that the economic situation in the United States is getting so bad that financial institutions like Citi Group are planning on a potential withdrawal limit for account holders.

We see that the Obama administration insists it doesn’t plan to nationalize U.S. banks, but this is a “rose by any other name” situation, says the Stock Research Portal Blog: “The degree of U.S. government interference in the private sector banking industry is a recipe for disaster, and is completely contrary to the ‘capitalism concept’ that served America well for many decades.”

Indeed, Citi Bank is one of the most unethically financial institutions in the world. It has been investigated for interest rate gouging and has unscupulous business practices such as not billing customers then asking for years of interest in backpayment.

The situation in Greece is not much better than the United States with its talk in the past year that default on its sovereign debt is imminent. The situation is so dire that the Greek government has imposed new legislation mandating maximum cash transactions to 1500 euros under the veil of curbing tax evasion. Greek Finance Minister unveils tax reform, wage policy:

“From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards.” “There’s tax relief for incomes up to 40,000 (euros).” “Taxable income based on the new scales will include capital gains from the short-term trading of stocks.” “Deposits in banks outside Greece are exempted from audits of their origin if they are repatriated within six months of the passing of the tax bill and are taxed with a 5 percent rate.” “Wages of board members in unlisted state companies will fall by 50 percent.” “The budget bill for allowances and compensations will be cut by 10 percent.” Source: Reuters.

Citigroup Warns Customers It May Refuse To Allow Withdrawals
John Carney Business Insider Febraury 21, 2010

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.

What’s going on? It seems that this is something of an error. The seven day notice policy only applies to customers in Texas, Ira Stoll reports at The Future of Capitalism. It was accidentally included on customer statements nationwide.

“Whatever the explanation, it doesn’t exactly inspire confidence in Citi,” Stoll writes. “But it’s hard to believe a bank would be sending out a notice like that on its statements.” You can read the rest of this article from Business Insider.

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