Liquidity

Imagine that you walk into your bank today and ask to withdraw all your money, and they tell you to come back in 7 days. It's not the thing that gives you confidence in where you are placing your hard earned cash.

We'll that's what Citigroup told it's customers in a recent statement:

"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."

Later Citi claimed it was a legal formality as a result of changes to FDIC coverage, and it only applies to Texas customers. Ok, sure.

You might say who cares, deposits are covered by FDIC insurance. But Last week four more US banks failed totalling 20 for 2010 (140 for 2009). I guess the FDIC is going to need a bailout too.

One interesting metric. Only 1 in 40 dollars of deposit is in the form of paper cash, the rest is electronic.