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Home >> Accounts >> Certificates of Deposit
Remembering Crash of '29; Elderly Mother Panics
With the news of the Dow falling, my mother (89 years old, being a product of the '29 crash) decided to cash in her 60,000 dollar CD, representing her life savings and security blanket and hold the cash at home. I know this is a wrong financial move, but at 89 her sanity and piece of mind is foremost. Anyway, when she went to the Citizens Bank of Medford, Ma., she was told that the bank could not give her cash because they and all their branches were short, being the close of the month with welfare checks of other customers soon needing to be cashed. They said that they would be able to give her cash in two weeks.
Is this legal; is this action addressed anywhere in banking regulations? When I asked if she could be given a cashier's check they replied, "unless she has an on deposit amount to cover the check (60,000)", they or any other bank would take two weeks to clear and pay out cash. She is very upset.
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 First, it is not unusual for a bank branch like the Medford Citizens Bank office to experience cash shortages, particularly around days when area businesses issue payroll, and when month-end checks come in to be cashed. Couple that with the fact that your mother was probably not the only individual getting nervous about the safety of deposited funds, and it is understandable that cash demands would be elevated. How long it would take Citizens to augment its cash balances is not known, two weeks seems a bit extended, but it may not be unreasonable.
As for taking part of the payment in cashier’s checks, that should have been the way to go. The bank should have been able to provide some cash and the balance in a cashier’s check. Your mother could have brought that cashier’s check back after several days to get more cash, if she needed it, or she could have held on to it for a while. The idea that it would take two weeks to get access to funds from a cashier’s check is simply incorrect. There’s nothing unlawful in the bank’s inability to provide cash in such an amount, however.
Citizens Bank is FDIC insured. Your mother’s money was safe, in spite of her understandable fears. Not one cent of FDIC-insured deposits has been lost since the FDIC was created when your mother was a teenager. Not only were her funds insured up to $100,000 back on 9/29, but they would now be covered up to $250,000 thanks to congressional action to increase deposit insurance coverage.
Hopefully, your mother’s fears have subsided, and she has either left her money in the bank or put it back. Keeping the cash at home simply is not a good idea for lots of reasons, not the least of which are safety and security.
Published on BankingQuestions.com 11/05/08; updated 6/16/09 and 7/21/10
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