Citibank (NYSE:C) has been scrambling to cover its rear-end after a communication they sent out stated it could keep their customers from withdrawing their money for seven days.
On a recent statement from Citibank to its customers it said this, “Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”
These communications weren’t just mistakenly sent to a few of the banks’ customers, it was sent all over the United States with that included on their customers’ bank statements.
When concerned Citibank customers read their statements, they of course deluged the company for an explanation. This is the release from Citibank after they discovered their error from the numerous queries:
“When Citibank moved to unlimited FDIC coverage in 2009, we had to reclassify many checking accounts to allow for immediate withdrawals in order to ensure all customers qualified for the additional coverage. When we moved back to standard FDIC coverage with most major banks in 2010, Citibank decided to reclassify those accounts back to make them eligible again for promotional incentives. To do so, Federal Reserve Reg D requires these accounts, called NOW accounts, to reserve the right to require a 7-day notice of withdrawal. We recently communicated this technical requirement to our customers. However, we have never exercised this right and have no plans to do so in the future.”
Citibank said these restrictions only apply to Texas, according to one caller, but the release above doesn’t seem to confirm that, and indeed concerning its NOW accounts, does have that option available to them to require a 7-day notice of withdrawal. If I was a Citibank customer, I would be on the phone immediately to get it clarified, as there are a lot of conflicting reports out there concerning this disturbing issue.
