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> Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to

> Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. Within the last century, yes, but quite far back within it: the last time anyone with modest amounts of money in the U.S. lost deposits in a bank failure was 1933, the year the FDIC was created. You can still lose money in a bank failure if your deposits are above the FDIC insurance limits, but poor people by definition would not have that much money, so it wouldn't explain their choice not to use banks.

Plasmoid 13y ago
The bigger risk if your poor is not having access to your money while the FDIC sorts out the problems. Now, I don't know how long it would take to restore access to your money in a bank closure but, for a lot of these people, having your funds frozen for a week or two would be crippling.
- shawn-furyan 13y ago
  There was a This American Life episode during the financial crisis when interest in bank failures was high. They followed an federal takeover of a bank, and from what I recall, it was an extremely swift and surgical procedure. The don't inform the bank ahead of time when they're going to take it over, because the last thing they want is a bank run. For that reason they also try to disrupt banking hours as little as possible if at all. [edit: here's the episode, very interesting listen: http://www.thisamericanlife.org/radio-archives/episode/377/Scenes-From-a-Recession http://www.thisamericanlife.org/radio-archives/episode/377/S...]
  - ben1040 13y ago
    There are also instances though where the FDIC can't find another bank willing to acquire the failed institution, so it can't just close on a Friday and then reopen on Monday as a branch of a new bank. One of those happened just last week: http://www.fdic.gov/bank/individual/failed/commbank-ct.html http://www.fdic.gov/bank/individual/failed/commbank-ct.html So it seems like in an instance like this, while you get a check for your insured deposits from the FDIC, your bank is gone and presumably any auto-debits or outstanding checks would fail to clear. You get to wait for the FDIC to mail you a check. Then you'd have to find yourself a new bank. This seems like something that would be fairly disruptive even if you are not poor.
a3n 13y ago
If a bank failed, how long would it take to be reimbursed by the FDIC? Probably much longer than a poor person could weather. Also, if you chose to forgo paper statements to "save the environment" (and reduce the bank's costs), and you were lax in downloading your statements, it would probably take even longer to be reimbursed.
- _delirium 13y ago
  Typically funds are available by the next business day, at most within a few days: http://www.snopes.com/business/bank/fdic.asp http://www.snopes.com/business/bank/fdic.asp No bank statements or formal claim for reimbursement is needed; the process is entirely automatic and usually done in less than 24 hours.
- ceejayoz 13y ago
  > If a bank failed, how long would it take to be reimbursed by the FDIC? Probably much longer than a poor person could weather. In most cases, the FDIC takes over the bank and runs it (in a matter of hours), specifically to prevent this sort of impact.

Plasmoid 13y ago

The bigger risk if your poor is not having access to your money while the FDIC sorts out the problems. Now, I don't know how long it would take to restore access to your money in a bank closure but, for a lot of these people, having your funds frozen for a week or two would be crippling.

shawn-furyan 13y ago
There was a This American Life episode during the financial crisis when interest in bank failures was high. They followed an federal takeover of a bank, and from what I recall, it was an extremely swift and surgical procedure. The don't inform the bank ahead of time when they're going to take it over, because the last thing they want is a bank run. For that reason they also try to disrupt banking hours as little as possible if at all. [edit: here's the episode, very interesting listen: http://www.thisamericanlife.org/radio-archives/episode/377/Scenes-From-a-Recession http://www.thisamericanlife.org/radio-archives/episode/377/S...]
- ben1040 13y ago
  There are also instances though where the FDIC can't find another bank willing to acquire the failed institution, so it can't just close on a Friday and then reopen on Monday as a branch of a new bank. One of those happened just last week: http://www.fdic.gov/bank/individual/failed/commbank-ct.html http://www.fdic.gov/bank/individual/failed/commbank-ct.html So it seems like in an instance like this, while you get a check for your insured deposits from the FDIC, your bank is gone and presumably any auto-debits or outstanding checks would fail to clear. You get to wait for the FDIC to mail you a check. Then you'd have to find yourself a new bank. This seems like something that would be fairly disruptive even if you are not poor.

a3n 13y ago

If a bank failed, how long would it take to be reimbursed by the FDIC? Probably much longer than a poor person could weather. Also, if you chose to forgo paper statements to "save the environment" (and reduce the bank's costs), and you were lax in downloading your statements, it would probably take even longer to be reimbursed.

_delirium 13y ago
Typically funds are available by the next business day, at most within a few days: http://www.snopes.com/business/bank/fdic.asp http://www.snopes.com/business/bank/fdic.asp No bank statements or formal claim for reimbursement is needed; the process is entirely automatic and usually done in less than 24 hours.
ceejayoz 13y ago
> If a bank failed, how long would it take to be reimbursed by the FDIC? Probably much longer than a poor person could weather. In most cases, the FDIC takes over the bank and runs it (in a matter of hours), specifically to prevent this sort of impact.