Hip Hop CSS Live : Sign of things to come: Citibank Disclosure Says Customers Must Provide 7 Days Notice to Make Withdrawal from "their" own Bank Account!

Wednesday, February 24, 2010

Sign of things to come: Citibank Disclosure Says Customers Must Provide 7 Days Notice to Make Withdrawal from "their" own Bank Account!

Imagine that you drive up to your bank's ATM machine hoping to take out some cash, only for it to provide you an error telling you to come back in a week because you must give 7 days' notice to make a withdrawal. Although the scenario sounds unrealistic, that's exactly what Citibank's (NYSE: C) account disclosure allows the bank to do.

In an informational statement to customers that got very out of hand, Citibank told its customers that it has the right to delay customers from taking out their own money in certain rare circumstances. The misstep occurred when Citibank included a disclaimer to that effect on statements to its customers nationwide.

According to various reports, the company's intention was to only include the statement to its Texas customers in response that a massive withdrawal protest was being planned because of outrage relating to excessive executive bonuses.

It's not just Citibank's account policies that allow the bank to withhold account holders' money, but it's actually part of Federal Reserve Regulation D, that limits withdrawals on certain types of FDIC-insured accounts. The goal of the regulation is to prevent the possibility of a panic-driven run on banks.

Although the revelation that Citibank has the option to temporarily withhold its customers money is within the bounds of federal regulation, it's a powerful statement made by the company has no intention of being swayed by public criticism of providing large bonuses to executives on the taxpayers' dime.

Citibank released a statement saying, "We have never exercised this right and have no plans to do so in the future."