Sunday, February 21, 2010

Citibank: Proof Positive of Idiocracy in Management

Here is the latest from those brilliant thinkers over at Citibank, the mother of all zombie banks:

“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,”

If you want to start a bank run, here is a good way to do it - tell your clients they may not be able to get their money out starting in about 30 days (okay, they may have to wait up to 7 days).

Not only is this a foolish thing to say, it turns out that it was a mistake in the first place. Evidently it was only to go out to Texas customers, but somehow made it to everyone.....further proof positive of the idiots running this bank.

Chuck Schumer started a run on IndyMac Bank not so long ago with less frightening words than the ones spoken above.

Furthermore, given that the taxpayers own north of 30% of this bank and that the government has been heavily involved in keeping it looking solvent (it isn't even close) you would think that this might be the safest bank to put your money. Of course you would be wrong and now they are telling you that if you favor daily liquidity maybe you should look elsewhere - not exactly confidence inspiring.

Why this bank isn't broken up and put out of its misery is a mystery to me, of course the deposit holders just might make that a reality.

Scott Dauenhauer CFP, MSFP, AIF

P.S. For the record, I have not done any research into what other banks may already have this provision, so it is entirely possible that this post, rather than being insightful is just...well...incitefull and populist in nature (not really my style, but either way I can't stand Citibank).