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Home >> Accounts >> Certificates of Deposit
Bank Transfers My Funds to Gain Eligibility
I have a loan with very small bank (6 owners). I have a smaller loan with another small bank. The president of one bank sits on the board of the other bank. Without my permission, $30,000 was moved from the one bank to pay down a loan with the other bank, so that they could be eligible for the Federal Bailout Funds. I never gave permission for them to do this, even though I do have loans with both. This transfer has caused me financial difficulty since $30,000 was moved and I did not authorize it. Can one bank do this with another bank - even when they are different banks?
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 No. Separately chartered institutions can't move your deposit from one bank to another. From the question, it sounds as though you have a new deposit account at the other bank.
There are programs where a CD may have funds in a separate bank. That is usually done to keep FDIC insurance for the customer. That should be done with the customer's approval.
If you do not want to do business with the bank to which they moved your account, ask that it be moved back and ensure that you pay no fees and are paid all the interest that you otherwise would have been paid. If they fail to do this in any reasonable period, tell them you want to call the ombudsman at their regulator's office and ask who that would be. You could place a complaint there.
Some issues with this are that you didn't authorize the transfer of deposits. That transfer could have placed your funds in jeopardy if you had other funds there that now caused you to be uninsured. Also, that other bank may have setoff against your funds if you were past due on a loan. They would have had to go through a court had your deposits been at the second bank, and what if there were different fees or interest rates paid on the new deposit?
Published on BankingQuestions.com 1/09/09
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