Many take their banks for granted, never considering they could close unexpectedly. Are you prepared for what happens if your bank closes?
May 17, 2019
Imagine if you woke up, got a steaming cup of coffee, and went to your computer. You open up your online banking portal to transfer funds and get the following message…
“Sorry, we cannot process your transaction at this time. Please try again later.”
No big deal right? Computers have issues, at least that’s what could be happening.
So you try again a few minutes later. Same result. Another hour passes, you try again, only to get the same result. Your money is effectively being held hostage by your own banking institution. The same one you trusted to keep your money safe.
But nine hours later, you still can’t transfer money between accounts, wire money, or pay any bills.
Now quit imagining, because this actually happened at Wells Fargo, and it’s not the first time. The Charlotte Observer reported the most recent occurrence:
Wells [Fargo], which houses its largest employment hub in Charlotte, apologized on Twitter to customers who had experienced problems making payments and transfers. The San Francisco-based bank did not disclose to a reporter what had caused the problem.
The bank reported at least 3 other instances this year so far, according to the article. All happened on a Thursday or Friday close to paydays.
In another Wells Fargo instance, bank cards wouldn’t work for some customers during a “funds hostage event” that lasted for up to five days:
The bank’s homepage went down, and some customers reported that cards were being declined as well. At the time, the bank said the problems arose from a power shutdown at an unnamed facility after smoke was detected during routine maintenance.
Five days later, the bank tweeted that some customers were still having problems with their accounts.
Just six days before that, according to the Observer, some customers couldn’t pay bills during another bank outage.
Wells Fargo’s former CEO abruptly left the bank because “too much focus was on him.” I suppose that’s understandable since the bank is plagued by glitches that kick homeowners to the streets, investigations, and has been fined billions.
As frustrating as Wells Fargo may be to deal with, a look at the FDIC’s “failed banks” list reveals 555 times where a bank closed.
Twenty-Nine Bank Closures Per Year… Is Yours Next?
Now imagine if you woke up, got that same cup of coffee, and logged on to your bank’s website… only to find it had closed its doors for good?
In 2007 Metropolitan Savings customers encountered that very horror story. Granted, in the U.S. the FDIC does insure deposits up to $100,000. Alleghany Bank took over in a couple of days, but then the horror continued for 70 former Metro bank customers…
… some 70 unlucky customers had balances over the FDIC insurance limit at the failed bank. They will become creditors to the failed bank. The FDIC will sell off the failed bank’s assets and pay them from the proceeds. That process can take years.
So if you were fortunate enough to have $150,000 deposited at the failed bank, you would have gotten $100,000 of it fairly quickly. But the remaining $50,000? Tied up in red tape for months.
According to the FDIC there have been about 29 bank failures per year since 2000, on average. (555 total failures since October 1, 2000). This includes Washington Mutual, and other “bigger” banks.
Yours could be next. And according to the FDIC, you could be without your money for a few days or more if your bank fails.
Nothing is “safe,” and that includes your savings. So you need to diversify now so you don’t lose your shirt when the next banks close.
How to Keep Your Options (and Exits) Open
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P.S. Don’t get complacent and assume your bank will stay in business. You need to be prepared for a “Closed for Business” sign on the door. Become a GWP Insiders member today and learn the strategies for diversification offshore while keeping your options (and exits) open…Become an Insider Today (Save 70%)