[SchroedingersCat]

Lately there seems to be some uncertainty about the ability of banks to weather the economic seas. Northern Rock barely escaped. Other banks have shown signs of weakness. What happens when your bank can't meet the cash needs of its customers? What is the best plan for surviving a run on your bank? Is there such a thing as a 72 hour bag for bank emergencies?

I've been trying to wrap my head around this thought for some time. Too much cash in the house can be a problem. Burglaries, housekeepers, etc. can put a quick end to that. On the other hand, keeping it in the bank could mean not having access to what you need to pay bills, buy food and the rest. How to strike a balance?

Anyone have experience surviving a bank closure or run? Anyone have a fiscal B.O.B? Plans to pay rent if your bank is closed? I try to keep a months expenses in cash, but I fear that isn't enough.

[mmasters]

Open accounts with different banks, few if any of the big banks like Chase, Citi, Wachovia and BOA are going to go under.

[anarky321]

people have effectively kept their money at home for thousands of years...its not that hard,
not risk free, but neither is keeping it in several banks;
biggest problem is that our financial system forces people to invest by constantly devaluing their savings through inflation, if it wasnt for that, most people wouldnt even use banks.

[cube]

$this->bbcode_second_pass_quote('mmasters', 'O')pen accounts with different banks, few if any of the big banks like Chase, Citi, Wachovia and BOA are going to go under.

[LoneSnark]

It depends on which country your bank is in. If you are in America with its devastating banking history then you have nothing to worry about. Just keep your bank statements as they arrive, the FDIC will let you cash out up to $100k within days of the bank failure.

Which, of course, rules out the possibility of a bank failure, as such strong protection discourages banking runs to the point that banks never 'fail', they just change ownership.

If you are in Britain with its non-eventful banking history then you potentially have serious problems as the insurance only covers a fraction as much money and even then will take months to pay out as depositors must get all they can from the bank before the insurance covers anything.

[I_Like_Plants]

Hiding it well can help, also, if there are bank robbers operating in your neighborhood, shoot them. Read up on good ways to dispose of the bodies, and problem solved.

A well regulated militia .... that means sighted in, the problem should actually be fairly small and foilable by a good floor safe, sneaky hiding places, etc. When the problem gets larger you'll have much more of a carte blanche to rid your town of people who would do this.

[FishAreBest]

Based on personal experience (of watching my pension company collapse), my advice is to make sure you're first in the queue to get your money out.

I followed the advice to "sit tight", and the situation just got worse and worse.

At the first hint of trouble, you need to be at the bank's door with a transfer request in your hand.

[Fiddlerdave]

$this->bbcode_second_pass_quote('', 'I')f you are in America with its devastating banking history then you have nothing to worry about. Just keep your bank statements as they arrive, the FDIC will let you cash out up to $100k within days of the bank failure.

[EnergyUnlimited]

Savings for "rainy days" can be converted into gold coins, 2 meters deep hole can be then drilled in your basement or shed, gold inserted, hole filled etc.

Now no one (including US government agents equipped with some techno gizmos) can find it, so problem solved.

"Everyday" money (eg your monthly pay) can be withheld from bank in form of cash but amount sufficient to cover your standing orders should be left.
Remaining cash can be placed in your cupboard and it is safe as much as anywhere.
Just make sure that your adolescent kids (if you have any...) don't know where it is and most of risk is mitigated.
Anyway, if someone stolen from you this $3000 or whatever it might be, it is not end of the world.
If any of these money are intended for "long term storage", then buy gold/silver and follow first option with basement or shed.

It is not as difficult to live without bank, as one might think...

[pup55]

$this->bbcode_second_pass_quote('', 'A')nyone have experience surviving a bank closure or run?

[dukey]

$this->bbcode_second_pass_quote('', 'W')e have this thing called "Lender of last resort"....There will be NO bank run.

[Twilight]

There is little inside knowledge, only common sense. Diversity is key. Maintain several accounts in several institutions of different types and sizes. Split your cash between them. Know your insurance limits. Beware of different banking brands being treated as one bank for insurance purposes. In the EU, you may even have the opportunity of having an account in another Eurozone country. People who travel a lot tend to do this anyway.

If one institution goes under, try to be first in line, but if you miss out and have to wait for restructuring to run its course, it is not the end of the world. As the Northern Rock run showed, governments will guarantee depositors even if it means warming up the printing press, if it means averting a general collapse. You will still have most of your money elsewhere.

If the run hits the home of the account into which your wages are paid and automatic deductions for accommodation and other essential expenses made, redirect it all into one of your other accounts. This only takes a few phone calls.

Now for the tinfoil doomer stuff.

Don't insist on cash 100% of the time. Take a cashier's cheque and take it to a different bank. If you are holding 100% physical cash and the system approaches the point of no return, the government may force you to stay invested in it by declaring an emergency and issuing new legal tender such that depositors receive favourable terms and those with large stacks of cash to convert are penalised. Try not to risk ending up on the wrong side of that message.

In a general banking collapse, your money is the least of your troubles. Don't worry about it. If it happens, you will receive a new set of challenges.

NO INTERNET/TELEPHONE-ONLY BANKING. Whatever perks you get, when the shit hits the fan you will be left hitting Reload.

[SchroedingersCat]

I am surprised by the amount of faith people have in the financial system. Yeah, if there is a major banking collapse there are other priorities to consider. But what about funds just not being available?

The banks (I'm talking about the US but other countries are similar) all rely upon the trust of each other to keep money moving. The Federal Reserve is responsible for the actual transfers between the banks. It's called ACH (Automated Clearing House). When you use your credit or debit card, several intermediaries are involved. The merchant or ATM owner, the acquirer, the authorizing institution, the settlement and interchange networks, and your bank.

Everybody trusts that the authorizations they get at each step will be settled at the next ACH transfer time, which could be two or three days away on a holiday weekend. If any of the banks or companies in the process crash or have their assets frozen before settlement, someone else is left holding the bag. At that point, none of the ATM or credit card acquirers will risk more transactions. Your bank might be fine, but you won't be able to use your credit or debit card until the networks trust each other again.

If this sounds similar to the current credit crunch amongst the banks, it is. Except this would be your ability to purchase restricted. Oh, and the Fed can pull the plug on settlement without any prior notice to the financial institutions. Kind of like closing all the hatches in the submarine to keep the flooding from spreading.

[Twilight]

$this->bbcode_second_pass_quote('SchroedingersCat', 'I') am surprised by the amount of faith people have in the financial system. Yeah, if there is a major banking collapse there are other priorities to consider. But what about funds just not being available?

Everybody trusts that the authorizations they get at each step will be settled at the next ACH transfer time, which could be two or three days away on a holiday weekend. If any of the banks or companies in the process crash or have their assets frozen before settlement, someone else is left holding the bag. At that point, none of the ATM or credit card acquirers will risk more transactions. Your bank might be fine, but you won't be able to use your credit or debit card until the networks trust each other again.

[Lanthanide]

$this->bbcode_second_pass_quote('Twilight', 'I')f the run hits the home of the account into which your wages are paid and automatic deductions for accommodation and other essential expenses made, redirect it all into one of your other accounts. This only takes a few phone calls.

[cube]

$this->bbcode_second_pass_quote('dukey', '')$this->bbcode_second_pass_quote('', 'W')e have this thing called "Lender of last resort"....There will be NO bank run.

[LoneSnark]

Or it can persue a policy of stable prices without risking its position as lender of last resort.

[Tyler_JC]

$this->bbcode_second_pass_quote('dukey', '')$this->bbcode_second_pass_quote('', 'W')e have this thing called "Lender of last resort"....There will be NO bank run.

[SchroedingersCat]

Are you in the 1.21%?

$this->bbcode_second_pass_quote('', 'E')stimated insured deposits decreased by $11.3 billion in the second quarter of 2007. The Deposit Insurance Fund (DIF) balance increased by $482 million (0.9 percent) to $51.2 billion. The ratio of the DIF to estimated insured deposits increased by one basis point, ending the second quarter of 2007 at 1.21 percent.

[Tyler_JC]

$this->bbcode_second_pass_quote('SchroedingersCat', 'A')re you in the 1.21%?

$this->bbcode_second_pass_quote('', 'E')stimated insured deposits decreased by $11.3 billion in the second quarter of 2007. The Deposit Insurance Fund (DIF) balance increased by $482 million (0.9 percent) to $51.2 billion. The ratio of the DIF to estimated insured deposits increased by one basis point, ending the second quarter of 2007 at 1.21 percent.