Citigroup warns customers it may refuse to allow withdrawals

Citigroup warns customers it may refuse to allow withdrawals

POSTED: Monday, February 22, 2010 - 10:19am

UPDATED: Thursday, April 8, 2010 - 4:24am

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."

UPDATE: According to Stoll, Citi issued a statement saying that it has been required to make this change by Federal regulations—and it no longer sounds like it's limited to Texas:

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 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."

Comments News Comments

Federal Reserve Notes are Fiat (worthless) counterfit "Tender". It is NOT money. Gold And Silver are real money. If anyone, in today's volatile climate keeps anymore in their bank accounts, other than what is absolutely needed to keep it open or pay the bills, you're in dire need of a psychologist or gullible as sin. And the latter is what they are hoping you will remain. D.L.W.

I heard from an employee that works with in citigroup that they are having huge financial problems and that they could be going under within weeks...

If you were smart you would withdraw your money and put into another bank cause citigroup is just a future bank failure waiting to happen and it is just a matter of time before it collapses.

HR1207 - S.604 - Audit The Federal Reserve

Maybe Citi is waiting for another Pay Day Loan. I never saw this statement from any FDIC bank.

American Banking News had another reason.

http://www.americanbankingnews.com/2010/02/22/citibank-disclosure-says-c...

If you really trust the FDIC and "ANY" bank with that amount of money your truly wacked out... My company haws withdrawn all monies except enough to pay monthly bills and uses credit cards to pay daily expenses. We also pay our credit cards off each month. I will not trust the banks or the federal government with money again...

***I do not worry about this risk ... $250,000 which the FDIC limit on coverage.** That would be great, if the FDIC wasn't already BROKE. Who do you think started all this mess and put us $3T in Debt? And you're going to trust them with your measly $250,000?? Good luck with that tough guy.

This is a bull**** story. C may be putting this provision into their contracts, however, they are in no position to put "gates" on depositor accounts. As a government owned bank I do not worry about this risk for any moneys under $250,000 which the FDIC limit on coverage. Anything over $250k with ANY bank should be diversified if you are a prudent investor. This is fear mongering!

Ashok Gangolli
Principal
Gramercy Consulting Group LLC
an RIA in State of NY
NY, NY

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