Banks Put 8-Week Hold On IndyMac Checks

People who got their money from IndyMac are facing new challenges as other banks put extended holds on releasing the funds when the checks are deposited. WaMu is putting 8-week holds on the checks. Wells Fargo is putting holds on amounts over $5,000. If you deposit more than that, Wells Fargo will only let you have access to the first $5,000. The Office of Thrift Supervision is looking into whether this is ok or not. Good, we needed something like this, that panic wasn’t looking frothy enough.

Waits improve at IndyMac bank branches [LAT] (Thanks to Kathy!)

(Photo: zoliblog)

Comments

Edit Your Comment

  1. Wormfather is Wormfather says:

    Who needs more than $5,000 at any one time anyway. Anyone who could not live off of $5K for at least 6 months is obviously living a lifestyle where they have things they dont need. Personaly, I only shop at the goodwill, I wait for my dinner at the back of restaurants and I bikeride 28 miles to work.

    People need to stop spending like there’s no tomorrow!

    /sarcasm

  2. cotr says:

    when i was younger and was picking out my bank i went with Citi. I know they suck, but they are so large that itll be the day after hell freezes over when they go under. Since the nearest branch is over 100 miles away, they are extremely nice.

    btw, no overdraft fees!

  3. Wormfather is Wormfather says:

    @camelontherun: You dont really belive that…do you?

    Enron
    Bear Sterns
    Indymac
    WashMutual???

  4. bonzombiekitty says:

    @Wormfather is Wormfather: Sadly, I wrote out a long reply of why it’s very hard to live for 6 months off of $5000 until I noticed your bike riding comment and sarcasm tag.

    For the record, I could probably last 3 months with $5000.

  5. Bladefist says:

    @Wormfather is Wormfather: I started hyper ventilating when I Read your comment. Put the opening “” at the top so I know where it’s going.

    This is not really a surprise. When I got a check recently from an insurance claim, from state farm, my bank wanted to put a 4 week hold on it. I don’t understand it.

    Actually I do. They get to make a ton of interest on it while you don’t have access to it, under the disguise of them being worried it’ll go through.

  6. dragonvpm says:

    @Bladefist: Bingo.

    The really sad thing is that that’s one case where big banks are often less obnoxious about it than smaller ones.

    Years ago, we moved our business checking to WF because the small local bank we had been with for 20+ years would insist on putting 1-2 week holds on any checks over $3k-$4k (which is most check for a construction company). Lo-and-behold, WF could give us access to those same checks within a few days at most (often by the next day).

    It’s amazing how banks can hit you for late fees, overdraft fees/loans etc… within minutes of it happening, but heaven forbid they actually give you access to money from a check quickly.

    Come to think of it though, this might explain why so many people have been having to stand in those long lines at IndyMac branches. They might be the folks who tried to go deposit their <$100k checks with other banks only to find out it would take weeks for them to clear. So much for the “they should use those new-fangled checks” avenue of blame-the-consumer attack.

  7. mmstk101 says:

    @bonzombiekitty: I could go at least 8 months on $5000!

    . . . . I would just have to stop eating and paying my rent

    : (

  8. You-Me-Us says:

    There should be no need to look into it. Anyone who’s worked in banking in the last 20 years should be familiar with Regulation CC (the “Expedited Funds Availability Act”) which very clearly lays out types of holds that can be placed on deposits. In the worst case scenario, 11 business days is the max. Wikipedia has a good concise summary at [en.wikipedia.org] .

  9. Ilikenumbers says:

    The bank my company does business with (M&T Bank) lacks in many areas, but in this department, they’re winners. They post a huge sign with the exact details of what gets held and for how long.

    Federal/State checks go in same day, as does checks written from an M&T Account. The rest of the way is actually in relation to the ZIP code and the distance from the branch in question. Nice to at least let people understand to some degree what the deal is.

  10. Klaus_Kinsky says:

    I remember when Regulation CC when into effect. The ironic thing about that legislation was that most banks would normally clear things right away. Once the law went into effect all banks had an excuse to extend their hold times.

  11. Wormfather is Wormfather says:

    @Ilikenumbers: This is what I dont understand…didnt regulations pass a few years ago that were supposed to make these payments get processed overnight?

  12. cotr says:

    @Wormfather is Wormfather: yea… they are monstrous globally speaking. even if they teeter totter, not only will the feds help, but so will saudi arabia! yay for other countries with my money!

    sometimes, im glad to be a poor student with barely any money.

  13. junkmail says:

    @You-Me-Us: Okay, maybe I missed something. I read that link, and it doesn’t look to me like 8 weeks is even remotely legal. Thoughts?

  14. hills says:

    Are we really surprised that it’s wamu that’s placing the 8 week holds?! Shocker.

  15. Ubermunch says:

    Bankers, Lawyers, and Salespeople: all cut from the same cloth. Now that I think of it… “Bankers, Lawyers, and Salespeople”… sounds like a Warren Zevon song. At least we’d all enjoy the song unlike the subjects.

    BTW: It’s not just IndyMac that gets unreasonable holds. I put in a BofA CASHIERS CHECK from a (major corporate) client of mine and had a 12 day hold put on the check by Provident Bank without any warning. It was only after several calls to “customer support” that got it pulled back. Provident Bank is WaMu’s second cousin I swear!

    Commercial banks suck. All of them. Always. Stick with a credit union. They aren’t a whole lot better but they usually *are* better.

  16. HeartBurnKid, creepy morbid freak says:

    @Wormfather is Wormfather: Come to California sometime. $5k wouldn’t cover the rent on my apartment alone for 6 months.

  17. HeartBurnKid, creepy morbid freak says:

    @HeartBurnKid, creepy morbid freak: Nevermind, missed the last line and the sarcasm tag.

    /me is a moron.

  18. Wormfather is Wormfather says:

    @HeartBurnKid, creepy morbid freak: That’s why you have to move further away and bikeride to work!

    I live in CT, it wouldnt cover my rent for 6 months either, not even close.

  19. kc2idf says:

    It doesn’t hurt to have money in more than one bank. They should be as different from each other as possible. Consider a credit union and a massive multinational (as I have done).

  20. seismic007 says:

    I’ll take my panic with a side of hysteria, please. And could you bring me an extra helping of anxiety, too?

  21. bohemian says:

    My question is were these people told about the hold before or after they deposited their checks? Telling someone up front about the hold is one thing, there are banks that don’t mention it when you deposit and only tell you after you call to find out why you can’t get at your funds.

    I had it happen to me, seen it happen to plenty of other people and it is usually a situation where you can’t go without the money for two weeks.

  22. lordargent says:

    bonzombiekitty: For the record, I could probably last 3 months with $5000.

    2.5 months (I’ve got bills to pay damnit).

    Then again, I also get paid twice (three times this month) per month, so wouldn’t need to touch the 5k.

  23. Average_Joe says:

    As long as the bank is still running as a bank, funds should be just as easily verified as any other bank. But considering the volume of indyMac checks hitting the streets the government should have issued checks directly from the FDIC with holograms and other security devices on them with assurances that the checks would be treated like cash and once funds are verified transactions would not be reversible. I would assume normal checks can be reversed and that is the reason for the long holds. If a bank gets inundated with hundreds of 100k checks from a single bank, they have a right to play it safe.

  24. ShadowFalls says:

    @camelontherun:

    You know, there is a saying. The bigger things get, the more likelihood they will collapse in upon themselves.

  25. FalknerEnceladus says:

    What about check 21? Isn’t that where they can electronically
    transfer money between banks, thus eliminating the need for holds? Crap
    I tell you.

  26. Orv says:

    Hmm. Maybe it’s time to take my money out of WaMu. I wasn’t worried before, because I’m under the FDIC insurance limit, but I don’t like the idea of my money being held for weeks if they go under.

    Not sure who I’d switch to, though. WaMu and Bank of America are they only places that seem to have a lot of ATM locations in my area.

  27. Swervo says:

    I’m seriously considering taking my savings out from WaMu because of this. I have both checking and savings with them, but they’ve now got me worried that if they go under, I won’t have access to *any* of my money for 8 weeks. If it weren’t for that, I wouldn’t be considering making sure I’ve got a good amount of cash saved up in two different banks rather than all in theirs.

    I’ll let ‘em know it was their way of doing things that drove me to it.

  28. Leohat says:

    Anyone paying more than $833.33 in rent would not last 6 months on $5000.

    5000/6=833.33

  29. chartrule says:

    @HeartBurnKid, creepy morbid freak:

    come to northern canada – you could live like a king for 5k

    (here 75 acres with 800 meters of beach front go’s for 200k)

  30. Orv says:

    @chartrule: There are places like that in the U.S., too. The problem is they’re usually in very poor job markets, which is why land is so cheap. They’re good places to go if you’re retiring on a fixed income, though.

  31. the_wiggle says:

    @seismic007: certainly, i’m on my way to pick up mine right now. . . . .

    @kc2idf: learned that the hard way during the divorce. 2 CUs & 2 Bank = piece of mind.

    @Wormfather is Wormfather: lol. family of 6 – all of us, we’d last 1.5 months, then we’d have to start killing some of us off. sigh.

  32. I deposited a large check this winter (more than $50,000) and it took almost two weeks for all of the funds to become available. This was due to Homeland Security regulations, but still…

    It must be incredibly frustrating for these folks not to have access to their money. I know that it was for me, and I wasn’t in a dire situation.

  33. lauy says:

    @ You-Me-Us:

    You are absolutely correct. In reality, most banks really don’t even need the 11 day rule anymore because of Check 21 (electronic processing and clearing). Most checks are returned now in a few days. However, because there are still smaller banks out there that cannot process image checks yet, they still have to go with the Reg CC guidelines. Being someone who has been in the financial services industry for over 11 years, seeing an 8 week hold is certainly a first and I’d suspect WAMU is violating Reg CC. Wells Fargo’s actions about holding funds, though not made completely clear in the OP, seem to be within Reg CC.

    These exception holds could also be in anticipation of potential fraud. I would not put it past fraudsters to create fake IndyMac accounts and checks, and then try to open new accounts at other banks under the guise of having to open an account because of the IndyMac debaucle. They get access to some cash initially, and once the check returns they will be long gone…seen the scenario many times before…

  34. furseekr says:

    @loquaciousmusic:

    Homeland security has nothing to do with it. If someone told you that, they lied.

  35. varro says:

    @lauy: Bank of the West was my business bank…..was, that is, until they put a 10-business-day hold on an insurance settlement of about $7000 I deposited.

    Bank employees refused to release the hold or even check with the issuing bank – this isn’t some dinky little bank in the boondocks; this is a bank with $56B in U.S. assets and is a wholly-owned subsidiary of BNP Paribas.

  36. huadpe says:

    @Wormfather is Wormfather: I have a $7000 tuition bill, that has to be paid. I need more than $5000 for that. $2000 more.

  37. Wormfather is Wormfather says:

    @huadpe: perhaps you missed the “/sarcasm” at the bottom.

    I dont know if $5K could get me and the lady through one month!

  38. You-Me-Us says:

    To answer the questions asked a couple of times above, if I remember correctly (I got the hell out of the banking business long ago, thank god), Reg CC requires banks to notify depositors at the time of the deposit of any hold placed on their deposits. My bank even goes so far as to print out a detailed form showing how much will be available and when, makes you sign a copy for their records, and gives you a copy of your own. The paperwork may not be a requirement, but I’m pretty sure some sort of notification is a requirement of Reg CC.

    Excessive holds should probably be reported to the Federal Reserve.

  39. Seneca24 says:

    You-Me-Us is correct.

    Unfortunately, I’m stuck as a teller at WaMu (for a few more days, anyway, thank god), and while I’m never quick to defend them (I’d send in one of those “WaMu Exposed!” articles, but you’ve already had 2), I do know that the report of “8 week holds” is completely, utterly, absolutely untrue. I’ve seen the internal correspondence, I know RegCC. The latest memo actually instructed us to NOT place holds on any IndyMac check unless our Early Warning System suspects it to be a forgery.

    Since there’s always a bit of confusion about Holds, I can clear a bit of it up:

    1. Holds can be placed on any paper item because, thanks largely to the advent of the home inkjet printer, any paper item can be (and often is) forged. The more common the check, the more often it’s forged.

    2. Stricter hold policies in the past few years are actually banks’ way of encouraging consumers and businesses to start using electronic transfers instead. They’re safer, faster, and cheaper to process since there’s very little human interaction.

    3. Hold times are determined by a common formula, which is Federally enforced (even banks don’t mess around with those guys). Under $5k: 2 days local, 7 non-local; Over $5k: 5 days local, 11 days non-local. Local and Non-Local are determined by the first 3 digits of the routing number, which define which Clearinghouse that bank is attached to.

    Lastly, if you yourself have encountered someone trying to put an 8-week hold on a check, let them do it, keep the receipt that details the hold time, and fax a copy over to your local DA and News. In theory, anyone involved with the transaction (teller, manager, operation supervisor) will be fired at the least, and possibly face fines and/or jail-time (I’m telling you, Fed regulators do not mess around!).