US banks shaken by biggest fund withdrawals since 9/11

Published time: January 25, 2013 11:45
Edited time: January 27, 2013 13:27
Joe Raedle / Getty Images / AFP

US Federal Reserve is reporting a major deposit withdrawal from the nation’s bank accounts. The financial system has not seen such a massive fund outflow since 9/11 attacks.

­The first week of January 2013 has seen $114 billion withdrawn from 25 of the US’ biggest banks, pushing deposits down to $5.37 trillion, according to the US Fed. Financial analysts suggest it could be down to the Transaction Account Guarantee insurance program coming to an end on December 31 last year and clients moving their money that is no longer insured by the government.

The program was introduced in the wake of the 2008 crisis in order to support the banking system. It provided insurance for around $1.5 trillion in non-interest-bearing accounts with a limit of $250,000. It was aimed at medium and small banks as the creators of the program believed bigger banks would cope with the crisis themselves.

So the current “fast pace” of withdrawal comes as a surprise to financial analysts because the deposits are slipping away from those banks which supposedly were safe. Experts expected savers in small and medium banks would turn to bigger players come December 31. 

There are a number of reasons behind this unpredicted fund outflow. Some experts believe it has to do with the beginning of the year when the money is randomly needed here and there. Others have concluded the funds are getting down to business and being invested.

Another set of data from the US Federal Reserve shows some deposits may have moved within the banking system from one type of account to another.

Comments (90)

MarshaInFlorida 03.02.2013 19:09

I love it when government and big business leave it to experts to try to figure out what may be causing the loss of depositors.  In typical ignorant fashion, not one is suggesting that it could just be that the "jig is up" and the American people are not going to stand by any longer and let the billionaires continue to rob us of our fair share of economic growth and stability, while they convert themselves from billionaires to trillionaires.

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Comet (unregistered) 30.01.2013 00:26

wntsmallgov (unregistered) wrote in #12
The US will not default because the government goobers will take the Federal Reserve Land and give it to the Countries they owe. Illegal to say the least and I am sure if the MidWest sees a Chicom flag on some land with their troops a Militia would be formed to fend off the invaders.  The world is so tied to each other that when several bigger nations fall all the rest will fall as well like well placed dominos. It is a matter of time.
Comrade, 
I like the way you think. As a native "Red State" Kansan, I wouldn't object to trading/selling all of the Commie "Blue States" to our global creditors I.E. China, to wipe the fiscal slate clean. The remaining Red States could then be the new reformed United States of America. We can call this process "Political Cleansing", similar to "Ethnic Cleansing".

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Ajaxxxx (unregistered) 30.01.2013 00:14

wntsmallgov (unregistered) wrote in #12
The US will not default because the government goobers will take the Federal Reserve Land and give it to the Countries they owe. Illegal to say the least and I am sure if the MidWest sees a Chicom flag on some land with their troops a Militia would be formed to fend off the invaders.  The world is so tied to each other that when several bigger nations fall all the rest will fall as well like well placed dominos. It is a matter of time.

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