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Another Bank Holiday?

November 6, 2010

Many of you that went to your local ATM on the wee hours of Sunday morning may have found that you did not have access to your life substance: cash. The Orange County Register and other newspapers reported that banking problems on Sunday morning were part of a national outage which prevented people from performing simple transactions such as cashing checks or withdrawing money.

Social media was raging in some circles today about numerous ATMs across the country that crashed in the early hours of Sunday morning. Some have theorized that this “bank holiday” was a result of a surge of people trying to withdraw money in preparation for feared bank shutdowns, even though these shutdowns usually happen on Friday evenings. Go figure. This is more likely a stability problem caused by daylight savings time.

Banks that were primarily affected were Wells Fargo, Chase and Bank of America. Other institutions included American Express, BB&T, Compass, Fairwinds, PNC, Suntrust, US Bank and USAA. Many Americans are quite nervous as the captain of the Federal Reserve, Ben Bernanke, prepares to unleash $600 billion in cash on the U.S. economy.

Meanwhile, there is little doubt that the perceived inability of banks to deal with a sudden demand for cash would place the US banking system in peril, along with the nation’s AAA credit rating. Fears are that a fresh dollar crisis is in the works. Surprising, terrorists haven’t enacted their terror against a vulnerable US banking system, which shows how much terrorists depend on the system.

Back in February, Citigroup sent an advisory to its customers at the start of the year which stated that the bank reserved “the right to require (7) days advance notice before permitting a withdrawal from all checking accounts.” This advisory stoked fears among some that financial institutions were preparing for bank runs. Bank holidays are not without precedent. President Franklin Roosevelt declared a bank holiday that lasted four days. Given the economic climate today, keeping some cash on hand instead of remaining dependent on your neighborhood ATM is advisable.

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