Bank Unwilling to Cash Check from Gold Sale

There was this article on Gary North's site today:

The Case of the 92-Year-Old Lady Who Cannot Get Currency Out of Her Bank
Franklin Sanders

Sept. 8, 2011
I am not yet sure what to think about this. I loathe to bother y'all, but feel obliged to pass it on.
A couple of weeks ago a customer, a charming 92 year old in Texas, talked to me about selling her gold. Her son, who trades futures and whom I know well, was expecting a big drop in gold, and he wanted her to sell. I demurred, but she wanted to sell it, and I always allow that reasonable minds can disagree about markets. Besides, I'm her servant, not her master. She sold it for about $673,000.
I sent her a check, and encouraged her to deposit it as quickly as possible. Last week she took the check to her bank in Texas, not far from Dallas, and told them she wanted to cash it. They called my bank and proved that the check was good, and she told them they could have time to clear the check. She also knew they'd have to order the money from the Federal Reserve and it couldn't get there until Thursday, and that was fine with her, too. Still, they refused. Then she went climbing up the bank bureaucracy, refused at each level, until she reached the head knocker.
Refusing to cash the check, he said with great oiliness, "We only have your interests at heart. We're concerned about our obligation to you."
Texas women know their minds, and can get pretty tart. "Your obligation to me," she snapped, "ends when you cash that check."
She even fell back to this position: "Tell you what I'll do. You get me the cash, and I will put it into a safe deposit box right here in your vault." No good. Her "best interests" still stood in the banker's way of complying.
Let me add at this point that you might confusedly think that a 92-year old might not know her own mind. You'd be wrong in this case. Besides, her fully grown son of 50 years age or more was seconding her action.
Next try: "Okay, you get me $50,000 this week, and $50,000 next week until the whole check is cashed." Nothing doing.
Her son called the Texas Banking Commission. While the bank has no legal obligation to cash the check before it has cleared, it certainly has the obligation to let her withdraw her own money when it's in her account.
First Banking Commission bureaucrat stuttered, "Oh, you can't do that! There are IRS issues!"
Nothing deterred, her son answered, 'I don't care if she has to fill out FIFTY forms. She'll do that, she just wants her money." No help there. He went uphill to the next bureaucrat, but was only told that they couldn't help him.
Now what do you make of this?
First, the raw fact: the bank refused to give the lady her money. Her money. Doesn't matter whether it was $100 or $673,000, even when she gave them time and latitude, they refused.
Next, one must infer that there is some level of cash banks will refuse to disgorge. Whether they are acting under orders and policies from the Federal Reserve or their own bank, at some level they refuse. Are they afraid of bank runs if the news gets out that one little lady pulled her $673,000 out in cash?
Maybe the Fed has them squeezing down cash demand because they just don't have much cash. Most business nowadays is conducted in pure electrons of bank credit. US government and the banking system have been trying to eliminate cash from the system for 30 years. I know from talking to sources at the St. Louis Fed and the US Treasury back in 1998 that about 70% of the $1,034.094 billion of currency issued by the Federal Reserve system (as of 31 August 2011) circulates outside the country. That leaves only 30% within the US, or $310.228 billion to spread among 311,800,000 people. That's $994.96 per head.
Maybe that's why my customer couldn't get her cash. There's not enough.
Or, as y'all may have noticed, once a bank gets hold of large amounts of your money, they seem mighty reluctant to turn loose of it. Their wheels seem to grind slowly when it comes time to withdraw, a lot slower than when they took the deposit.
Whatever the bank's reasons for refusing, the raw fact remains: the bank refused to give the lady her money when she demanded it. Now the friends of paper money may quibble that she might have drawn a check on the funds and bought something else, but I call it a defalcation. When the bank holds her money as a fiduciary and refuses to give it up, that's a defalcation.
The time may be drawing nigh, or may have arrived, to trim all bank balances to an absolute minimum and keep unused cash balances in silver or gold. Now shake all that cobwebby propaganda and nicey-nice talk out of your head and face the truth. Look it dead in the eye. The banking system is utterly corrupt, and will not balk at stealing your money large or small. The government will help them. A fractional reserve system is bankrupt by definition: only a fraction of its deposit liabilities are covered, and a right tiny fraction at that.
For the past ten years in one case and three years in another I have been managing the unused cash --- funds not needed for at least twelve months -- for two organizations. I have kept as much as possible in silver and gold, and that has paid off wondrously well.
But any well-trained financial adviser will point out the risk in that: the silver or gold might drop just about the time you need to liquidate for paper dollars.
Right, it might, but it hasn't caught me yet. Besides, putting the unused balances into silver & gold aligns our assets with the primary trends: the 15 to 20 year trend carrying gold up and the primary downtrend carrying US dollars down.
And if gold and silver do drop? Well, I have left enough of a cash cushion to take care of most eventualities. So if they do drop, I just hang on and wait for the primary trend to bail me out. Meanwhile, valued in paper dollars, our unused balances in gold and silver are a lot bigger now than they used to be.
Don't forget that keeping unused balances in metals has a cost. The spread between buy and sell is about 7-1/2% to 10%, so silver or gold must rise that much before you break even. Can't do this with money you might need in three months.
And no investment is forever. At some point the precious metals bull market will end, and we must sell, but that point is so far out there nobody can see it from here. Three years at least, and probably longer.
Look at it another way. What if the banking system takes a holiday? What if your particular bank goes bust? What if the government and the banking system limit withdrawals "during the emergency"? In that event, would you rather own silver and gold, even falling silver and gold, and have control of them outside the banking system, or own bank deposits which you cannot control or withdraw?
Something in your hand, or nothing? Gold in hand, or untouchable electrons in banks? Which do you prefer?
Taking all risks together, keeping unused balances in gold or silver makes more sense to me than keeping them in a bank. However, I freely confess, admit, and warn that most people --- including most mainstream financial advisers -- consider me a paranoid or lunatic about the banking system. You must think about that before you act on my recommendation, and take into account of all the ways it might lose you money.
Listen: I do not aspire to play Chicken Little. I try hard to look on the sunny side of everything & hope for the best outcome, but there just ain't one with banks, any more than there is with fever blisters. It's about time for y'all to take the money and run, before they take it from you.
Think about it. I'm not saying do it today. You might wait a week or so to see where gold and silver land after yesterday's drop.
What are the practicalities? I prefer the big, low premium gold coins like Austrian 100 coronas or Mexican 50 pesos or even Krugerrands. They have the same spread as American Eagles, and no risk of losing premium. But buy what makes you comfortable. Very best wishes, Franklin Sanders The Moneychanger

Why wouldn't they cash the check?

http://www.garynorth.com/public/main.cfm

 

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Her request was unreasonable. Nobody tries to turn that much money into currency unless they are (1) senile or (2) a drug/arms dealer. Imagine if they gave a 92 year old woman the cash and she lost it, had it stolen, or "invested" it with a con artist. The bank would be immediately sued. They did the right thing.

 

If I were her, I'd deposit it, then write checks for cash in whatever increment allowed until it was out.

 

I think the story is BS.

 

I am not sure about if its the right thing, but I also do not think its a conspiracy. I believe she could ask around and find a bank willing to give her the cash. She could then simply wire the money from one institution to another, and they could give her the money.

Sounds like a lot of rules made up exactly to prevent what Cloud talks about, but its frustrating if she is in her right mind. Its still silly to take cash out and miss out on interest, but I agree she should have that right. Have her simply call around to different banks, there should be one that will do that for her, especially if her and her son convinces them she is not senile.

 

I believe the point is, even if you wanted your money, its not there, its a bunch of 0's and 1's in a computer. If you can save your own money, why put it in a bank? Unless its an obsurd amount of money, you are better off keeping it yourself.

 

Sure it might not be physically in that branch...but it is in the bank and the bank can order it. I'm sure there is more to this story than is in this article. When banks are dealing with a large sum of cash like this...there is a ton of Federal regulations they have to deal with and it takes time. I know the article says she was willing to fill out whatever paperwork...but I'm sure that was also a mountain to climb. Odds are, she didn't understand what she needed to do.

 

Interesting story, right or wrong could definitely used some paragraphs.

 

Doing a few searches puts the legitimacy of this story in doubt. The story as written does not make any sense, and it appears that to read more about it you have to sign up for a pay site.

 

Perhaps her age got in the way. We've all read stories of the elderly being conned into withdrawing a life's savings.

Still, I detest government and institutions protecting me from myself. If they need to take reasonable precautions to protect themselves, so be it. Just don't refuse to return my money when I want it. And it's no business of theirs what I intend to do with it.
Lance.

 

I also believe they are over-stepping their boundaries as a bank by not letting the lady have her money albiet her being 92. Senile or not, it is HER money and it should stay that way. No one else should be able to speak upon it as their own unless it is confirmed she is incompetent. Regardless, Even though 650+ thou is a lot of cash to be walking around with, the fact remains that it is hers and i do not think a bank, legally, can tell her no, besides waiting for the money to arrive.

 

The patriotic act was enacted to "protect us". Thanks government!

 

I doubt it's the bank and I don't think in this case it has anything to do with the lady. The Federal regulations are in place to prevent illegal activity...many of them are for anti-money laundering. That is why it is hard to withdraw or deposit large sums of cash. There is always paperwork.

If memory serves...the paperwork isn't necessary if the cash is in the account. But to cash a check or deposit over a certain amount in cash then it is required. But, those lows way predate the Patriot Act.

 

Question I have is why would a 92 year old lady need $673,000 in cash? Why would you not deposit the money and draw out what was needed? seems a bit strange to me unless there was a 70 year old playboy waiting for her out in the parking lot with tickets to Vegas. I think the story probably had some truths to it, and if it was a pay site (conspiraciesRUS.com) then I am sure hyperbole of at least 50+% was added to create a buzz and sell more subscriptions.

Bank was probably wise on erring on the side of caution, there are about 1/2 dozen agencies with AML rules in place for large transactions like this. Right or wrong the bank being hesitant was well within they're rights to question and scrutinize the transaction.

 

Me 2.

What is the name of this alleged woman/Texan/Looney-Tune, pray tell?
What is the name of each respective bank?
What is the source of this story? ( How did you hear it and from whom?)
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I have a friend who recently required $30K in cash (as he thought ) to consummate a deal involving a county treasurer's deed. Unable to acquire that much cash ( this is small town rural Colorado), the bank provided him with a cashier's check for the amount they were unable to provide in folding money.
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Finally, I will remark that Jed Clampett had the same problem with Mr. Drysdale regarding his ( Mr C's) 13 million. They worked it out as I'm sure will your fictional characters.

 

It doesn't matter what her motives were. It's her money, and it's her decision what she does with it if we are to believe that we live in a free society. Thought policing is a scary precedent.

 

Actually a CTR (Currency Transaction Report) is required for every deposit, withdrawal or exchange over $10,000 in cash, the transaction is then reported to FinCEN. The Patriot Act, amongst other things, also expanded reporting requirements to non-financial institutions. I do find the lack of specifics in this "story" to be suspect and likely an embellished account of what (if anything) really happened.

 

So, deposit the damn check, wait for the funds to be available, go get your money.

Sheesh.

This is nothing more than a fanciful story encouraged to get subscriptions to a site that's going to tell you how the evil gubmint done aimin to keep yer money from ya'z, and you'ns should be a-buyin the gold!

 

I does matter because where the funds came from had to verified and reported. If there were no standards, policies or procedures put into place then any drug dealer could write a check from an offshore bank, give said check to US citizen for cashing, give the citizen a 1-2% finders fee and effectively launder any amount of money thus making they're transaction invisible.

While I get the idea of a free society, there must be rules in order for that society to exist. This is a country of 260+ million people not a 20 acre commune in Northern Oregon.

 

All she had to do was deposit the check, wait for funds to clear then transfer the money. But getting cash is always problematic when dealing with banks. Frankly, most of them just don't have the money on hand. I had a similar problem trying to cash a $25,000 cashier's check drawn on the bank who refused to cash it. I mean, they just couldn't cover it. Now, if you or I issued a check with insufficient funds, it would be dealt with a bit differently.

She should write a check to the Flamingo Sports book in Las Vegas and then draw cash from her account as she needs it. They do have that amount of cash available.