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naraburns  nihil supernum  1yr ago (text post)   3329 thread views

Small-Scale Question Sunday for March 26, 2023

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I have a dumb question that I thought of while reading an article about the SVB thing. Say you have $50 million in a savings account. You are really smart (or an idiot) and after doing your research you expect the entire banking system to collapse in a few weeks, and you want to take your money out and figuratively “stuff it under your mattress” (as in not just wire it to a different bank account). Is it possible to even do this? I know you can’t just walk into a bank branch and ask for your $50 million dollars, but say you informed them ahead of time, will they actually be able to give you $50 million in 100 dollar bills? If they can, will they deliver it to you in an armored car, or is it your problem to figure out what to do with it? Is there some way of dealing with this where the Fed will hold it for you in something like a “bank account”, or you can get some sort of government IOU so you don’t need to take it out of the banking system in cash?

I say okay, and ask how I am supposed to close the account and transfer the remaining balance. He said I can close the account and withdraw the remaining balance only in cash. Cash? At this point, I literally asked: "like, green paper money cash?" He says yes. The balance in the account is somewhere around $1M.

[...]

This manager is very helpful, if not a bit gruff. He explains to me that each local branch has some sort of performance metric based on inflows and outflows at the given branch. Therefore, funding a $1M cash withdrawal was not attractive to them. I'm learning a lot in a really condensed period of time at this point. I don't even know if what he's telling me is true, or legal, all I hear is "this is going to be hard to do if you want it all at once."

But we do want it all at once. And we want to close the account. Now. He is not happy, but he says he'll call me back in 24 to 48 hours. True to his word, he calls me back the next day. He says that he had to coordinate to ensure his branch had the proper funding to satisfy this transaction, and that the funding would be available at a specific date a few days hence. He said I have to do the withdrawal that day because his branch will not hold that amount in cash for any longer.

He also subtly suggested I hire personal security or otherwise deposit those funds somewhere with haste. I believe his exact words were "if you lose that check, I can't help you." Again, this was a one time event, and I don't know how true that all is, but it was said to me.

A few days later, I walk into the branch (I did not hire personal security). I tell the teller my name and there is a flicker of immediate recognition. The teller guides me to a cubicle, the account is successfully closed, I'm issued a $1M cashier's check, and I walk out the door.

https://mitchellh.com/writing/my-startup-banking-story - Interesting story about a startup founder's interaction with the world of banking.

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