Credit unions already making contingencies for bank runs! : LUSENET : TimeBomb 2000 (Y2000) : One Thread

I was at DeJager's Year 2000 Press Clippings site a few minutes ago. I saw an article there that made my jaw drop. There's an article in "Credit Union Times" that clearly shows the industry is concerned about banks runs, is making contigencies, and even has estimates about how much money will taken taken out!

Here are a few quotes from the article-----

"Liquidity issues related to Y2K are now starting to come to the forefront. Through U.S. Central, corporate credit unions are offering their members Y2K committed lines of credit (CLOC) to help prepare CU's for higher liquidity demands around the year 2000."


"The lines of credit from the first offering are good through November 1, 1998 until March 31, 2000"


"Tolen said that CU's must prepare not only for liquidity issues, but also currency demands. 'There's not likely to be a liquidity problem, but more of a cash distribution problem. Credit unions have to be in contact with their suppliers of coin and currency, ranging from the armored cars to the Federal Reserve,' he said."


"Corporates can handle liquidity issues, but credit unions need to know how much currency their vaults and ATMs can handle."


"Francis Bradshaw, vice president of information systems for First Carolina Corporate CU, Greensboro, N.C., says the corporate will be holding a "cash demand" seminar in January for its member C.U.'s. Representitives from the local federal reserve banks, armored car services and CUNA officials will be on hand to talk about currency issues. Really, how credit unions are going to distribute the cash is the issue. We believe if credit unions can do a good job educating their members, there won't be a strain on currency...' "


"There's definitely more of an awareness about liquidity for Y2K. The thing now is to see if there's going to be enough currency available. If you listen to some fo the Federal Reserve governors, they're saying there will be."


"At the high end, 25 million credit union households each needing $800, there would be a shortfall of $17.2 billion. Our conservative baseline assumption of roughly 15 million households needing $500 each, shows a $4.7 billion currency shortfall."

my last quote from this article...

"We will be liquid. But we also know there's only a finite amount of currency available in the U.S. If a problem arises, there will probably be a rationing of currency..."

I bothers me to see an article like this in print so soon. Maybe in April of 1999, but this is only November of 1998. Another reason to think there may be bank runs. Could cash withdrawals at banks and credit unions ALREADY be going up?

-- Kevin (, November 09, 1998


The anouncement has already been made (I wish I had tghe cite for this but it escapes my filing system), that the banks etc have the authority to, and will be, limiting the daily cash withdrawl ammount when they feel the need.

Why would we be surprised?


-- Chuck the Nighr Driver (, November 09, 1998.

It surprises me the industry would let a story like this get published so soon. We're still more than a month and a half away from the first noticeable failures

I do know (or I think I do) that banks reserve the right to require 30 days notice before you withdraw your money. That's an old rule that goes back awhile. It's just a surprise to see this talked about so soon and so plainly.

It must mean trouble. I didn't expect to read something like this until at least January or February of 1999.

-- Kevin (, November 09, 1998.

Remember you can withdraw less than $10,000 dollars and it not have to be reported to the IRS. However, there are some laws against "structured" withdrawing that could get you in trouble.

Here is some advice from a man who knows: (sorry about the length)

A WARNING ABOUT WITHDRAWING CASH by Franklin Saunders ---------------------------------------------------------------------- ---------- Some of the advice I am hearing about withdrawing cash (currency) gives me deep misgivings. I fear that ignorance & lack of preparation may run some people afoul of the cash reporting regulations, earning them a criminal prosecution.

I'm not an attorney & don't presume to give legal advice, but as I understand it the law requires reporting by a Cash Transaction Report (CTR) whenever someone withdraws more than $10,000. Shortly after that law was installed, congress added the crime of "structuring," i.e., ordering your transactions to avoid the reporting requirement. It is the crime of structuring if you intend to withdraw F$12,000 in total, & withdraw F$2,000 a day over six days in "related transactions" to avoid the reporting requirement, for example.

The danger is that federal courts in most jurisdictions have interpreted these statutes & regulations as "strict liability statutes." That means that intent (mens rea) is not necessary to break the law. In fact, you don't even need to know that it was a crime. The law is being interpreted exactly like a speeding law -- if the speed limit is 40 & you are driving 50, you're "guilty" whether (1) you intended to break the law or not, & (2) whether you knew the speed limit was 40.

When people to go to their ATMs & withdraw as much as they can in several transactions, if they intend to withdraw more than F$10,000 in total, that could be interpreted as the crime of "structuring," even though they have no criminal intent or the money is not the proceeds of some specified criminal activity. (Of course, if you make a habit of withdrawing F$1,000 every time you get paid, or you and your wife decide to cut up your credit cards and go on a completely cash budget, I suppose that wouldn't be structuring, but who knows? I'm not weaseling here, the law is just that vague.)

To protect yourself, I believe people who want to withdraw sums of more than F$10,000 should approach their bank officer openly & (1) ask him about the bank's Y2K compliance, (2) tell him that you are concerned about the Y2K problem & (3) you intend to withdraw some cash for your own protection & (4) you understand the bank doesn't inventory much cash, so (5) what is the best way to withdraw the cash to make it easy on them. Afterwards you should send a letter to the bank officer memorializing the appointment. You can expect the bank officer to try to convince you not to withdraw any cash. Be always polite, but firm. After all, it is your money.

At the appointment you should also have one other person (not your spouse) with you, to act as a witness. If the banker asks you to fill out a Cash Transaction Report (CTR), FILL IT OUT. DO NOT OBJECT OR REFUSE. I'm not worried about filling them out anyway, because I'm convinced they just throw them into some big room in Washington, there to languish unless they have some other criminal investigation or prosecution in mind. In any event, the remote danger of filling out the CTR is far, far smaller than the IMMINENT danger of a criminal prosecution for structuring.

I discussed this concern with a lawyer friend, and he suggested another similar method. Ask your lawyer to write your banker a letter like this one below. Attach supporting articles as you think necessary. Note that neither my lawyer friend nor I am giving legal or financial advice. I'm publishing this letter for information purposes only. Be sure to consult your own attorney for specific advice for your own situation.

-- James Chancellor (, November 10, 1998.

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