So, I was in my bank on Friday afternoon, waiting in line to see a teller so I could get a roll of loonies for my laundry that I had to do the next day.
A guy who was at the teller was having a conversation with the teller and someone who appeared to be a supervisor of some sort.
He was frustrated and agitated but he was not angry or rude. The teller looked scared and the supervisor was calmly explaining that it was a new policy to hold bank drafts for a few days.
The thing is that bank drafts (as far as I understand) are as good as cash. So are certified cheques or money orders. You don’t need to wait for them to clear.
With modern technology, you can see instantly if the money is there or not, there is no manual processing or other such things that need to happen (as far as I understand).
I have heard of banks in the US doing silly things like this, making up any excuse that they can to delay you getting access to your money.
In the incident with the guy at the bank, it seemed that transferring funds with bank drafts was something that he did all the time.
He even had the receipt for the bank draft and that was not good enough for the supervisor. She just kept repeating that it was a new policy of the bank, to hold the funds for a few days.
This is being done because the banks themselves are having liquidity (cash flow) problems. They have also just been ordered to increase their cash reserves by federal regulator.
People keep saying that “our banks are fine” and snicker at the US banking system. They keep pointing to the fact that Canada weathered the storm of the 2008 Financial Crisis quite well.
Well, here are a few things to consider:
1. Canada (publicly, privately and corporately) is way more overleveraged (in debt) than the US was when the 2008 Financial Crisis.
2. The Financial System (and banks) are much more interwoven around the world so if a crisis hits in one area, it will quickly spread to all other areas of the globe.
3. As a result of the 2008 Financial Crisis, we bank depositors are now considered “unsecured creditors of the bank.” All that a bank needs is the permission of cabinet (not parliament, not new legislation) to steal your money in your bank account and give you shares in the bank (a bank that at that moment would be failing) all without telling you or getting your permission.
Things are getting dicey and we here in Canada are not immune to the goings on in the world.
Be careful out there and keep an ever watchful eye on the shenanigans of banks and corporations.
All this is coming at a time when I want to look forward to buying a home . . . I am worried but I will move forward prudently and try to keep hope alive.