Removing money from bank in trouble is against the law? : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Sometime back there was a thread re a law on the books that stated that you could be made to return the money to the bank, if you removed YOUR money knowing the bank was in trouble. There was discussion re a woman in Knoxville that had gone through this a few years back, had been sued by the bank and had to give HER money back. I have searched the archives until my eyes cross. Does anyone have this thread book marked? A fellow who works with my husband has a daughter who is a branch mgr of a Florida bank in our area. When he and chubby hubby were talking, CH mentioned this law. They guy says CH is nuts and he was going to ask his daughter. I would like to be able to send that thread to work with CH. Of additional interest is the thread on the swing acc't where the bank will take your "excess" from your checking acc't and put into a savings acc't where they then have control over your removal of same. Any info would be appreciated. Other than we now have an armed guard at our little branch bank, things are pretty normal...normal being that the tellers blanch white when you ask for money. But....We have reached our pinnacle of success this week. I will have to put money INTO the checking acc't to pay a bill. YES!!!! Taz

-- Taz (, December 19, 1999


I remember reading this also, it was on Gary North's daily updates maybe in May. Hope this helps.

-- Susie Q (, December 19, 1999.


Chubby Hubby is essentially correct. A depositor is treated as a creditor when a bank fails, and there is specified an order for paying first the Lawyers (BTW, the only lawyer to appear at the Phoenix Y2K Expo in February is a Bankruptcy lawyer...think about it!) then various creditors. Depositors are pretty far down on the list.

Now, here is the legal reasoning. If a member of a class of creditors gets paid with knowledge of the bank's peril, it can be set aside as a Preferential Transfer. In other words, by getting your money out before the failure, you deprive other creditors in your priority class of an equal percentage of distribution.

Ain't it grand that, 12 days before the END, we are reduced to debating the fine points of Bank Bankruptcy procedings?? For the last seven years we have been treated to a political circus and the work didn't get done. Let's remember next November ALL the politicos responsible!!! (end of soapbox rant)

-- K. Stevens (kstevens@ It's ALL going away in less than two, December 19, 1999.

Tell the Chub Hub not to worry. If a bank was in that bad of a condition, all accounts would be frozen and their doors would be closed before that kind of information would get out to the customers.

Also, if it is really necessary to keep part of your hard-earned assets in the form of digital electronic memory, the consumer advocates suggest that you would be better off switching to a credit union if possible:

"Once youve considered all your options, you might decide to forget commercial banks altogether. "If you have the ability to use a credit union we recommend that, because they are almost always cheaper and theyre often fair with late fees and bounced check fees, Sherry said. "Those are the ones that really hurt. Credit unions, by definition, are non-profit member-owned cooperatives, whose membership consists of people with a common trait -- either an occupation, association or community. The credit union industry holds total assets of $407 billion, but 65 percent of them have asset levels below $20 million. The largest credit union in the country is Navy Federal FCU, in Vienna, Va., with $11 billion in assets as of June 30. Unlike a bank, a credit unions product offerings are driven by the demand of its membership, not whats most profitable, the National Credit Union Administration reports." /1999/12/15/banking/q_banking/

Don't support the multi-nationals, they not only want to own your money, they want to own you.

-- Hawk (flyin@high.again), December 19, 1999.

This is the thread, Taz.

I posted a response under the name "notmy" to illustrate how the scheme works. I used the phony name notmy because of the possible legal ramifications.


-- notmy (notmy@usual.handle), December 19, 1999.

Regarding credit unions: I don't know about other states, but in MI it looks like most (or all) credit unions keep *your* deposits on account in a *bank*. In other words, you make a deposit at the CU, and at the end of the day, the *CU* makes a deposit at the *bank*.

-- Ron Schwarz (, December 19, 1999.

One thing that should help is the fact that 99% of banks and financial institutions are compliant (so they say), and the FDIC isn't telling us which ones are in the non-compliant 1%. Therefore, how could you know in advance that there was going to be a problem?

And if there was, could you imagine what a complete idiot the bank's lawyer would look like, trying to say that you were still liable because you didn't believe their public lies of compliance and took your money out anyway?

In addition, with all this propoganda from the highest sources about the bank being the safest place for your money, I think they'd have a tough time getting your money back. There would definitely be an uprising of those who prepared (at least I would hope that would be the case - at a certain point we have to say enough is enough).

Furthermore, can you imagine what a complete horror show the judicial system is going to be when the s**t starts flying? Would they ever even get to your case, and by the time they did, how many people would have spent the money they withdrew just to survive because they lost jobs, had medical bills that their (noncompliant) insurance company reneged on, etc.

That being said, I'm still glad I made most of my "arrangements" last year!

-- Clyde (, December 19, 1999.


Even if they did try to get your money back, you'd still be better off having it in your posession.

I think it would be a lot tougher to get your money back from an insolvent institution or the FDIC, than it would be defend what you already have in your posession.

-- Clyde (, December 19, 1999.


What if you had money in the bank, but have been using it to live off of for the past year and spent it down to zero just before the rollover? Would they be still able to get a settlement from you and garnishee your wages?

Also, how would they know that you still had your cash buried in the woods and hadn't spent it by the time your case went to court?

If they did get a settlement from you, then just declare bankruptcy - that's what everyone else will be doing, and if you don't feel like taking that route, just settle with them for a few cents on the dollar.

Their legal department will be so frazzled and f***ed up, they'll probably take anything they can get, just to get your name off of their books.

-- Clyde (, December 19, 1999.


Since money in the bank is nothing but a few bytes of memory on some computers, it doesn't really matter where it is. The point of the article at the link I provided is that the these huge bank mergers are now providing sophisticated services for their wealthiest customers, and passing the additional costs on to the little guy as well, even though the average Joe doesn't even need or use these services.

-- Hawk (flyin@high.again), December 19, 1999.

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