After reading the letters about banking reality, I would like to add what I have learned from working at a reputable bank in the Midwest. The bank never has enough cash on hand to supply all their “demand “ or checking accounts, no matter what their legal fine print says.
The amount of cash is mandated by the Federal Reserve for the banks in their region. Each week the Fed tells the branch how much cash they can order, how much excess cash must be sent back to them, and how much cash they will need to fill the ATM. The branch has no control over this process.
The branch is under extreme pressure to maintain the least amount of cash in the vault needed for expected customer volume because the Fed charges compounding -interest on the entire amount. Every penny in the vault and teller drawers is earning interest for the Fed while in the possession of the branch. If your branch has a high customer and cash transaction volume the Fed will increase their allotment of currency. But, a small town branch with limited transactions, such as mine, will be given less.
Any given week people want to withdraw their own cash or cash large checks. Due to our small volume and limited cash we allow up to a certain amount (usually $3,000) for each request. Any withdrawal over that amount has to be ordered for the next week’s Brinks delivery. Most people are irritated by this, and a few get hostile, but we have no choice. The branch would empty the vault within the week if we honored all requests for large transactions.
What can go wrong? Brinks did not show up on their delivery date to replenish our currency, during a major holiday week when large withdrawals were expected. We were in panic mode, reduced the amount of cash we gave to customers, and anticipated having to empty the ATM machine in order to process transactions. As expected, customers were furious at our reduced capacity. Some asked pointed questions about why we could not produce their money…we had to apologize for the inconvenience and add them to the order for next week. It worked out that we had enough until the following week’s delivery, but the branch would have closed if we had run out of currency. BTW, no explanation from Brinks or the Fed for the missed delivery, we were on our own.
Another reality is money in a bank is only a number on a computer screen, and it can vanish without warning if the internet were to go down. That paper currency hiding in a house may be practically worthless, but it is still better than a computer number accessed by a plastic card. There have been times in my branch when the computer programs experience technical problems and we could not see any customer accounts. Since we cannot allow withdrawals without making sure they have the funds available the transaction is declined. You have not seen fury until you tell a customer they can’t have their money because the computer is down. During those technical problems it is bank-wide so customers could not go to another branch for money.
There have been rumors of giving the President the power to control the internet, for our own safety of course. What if that power is granted and the person in that office enacts the “kill switch” for whatever reason. Besides the whole of society coming to a halt it would mean banks and ATMs would close immediately.
A bank is a business making a profit. They do not hold our money out of charity…they get charged for it and they charge us for it. Set up your finances with the bank, but just know that they are subject to the same supply-chain disruptions as a grocery store and take precautions to keep cash and coin on hand. Thanks for this blog, we have learned so much and are taking our prepping very seriously. – T.O.