More than $114 billion has been withdrawn from the nation’s biggest banks in the first full week of January, and industry analysts are struggling to understand why.
The Federal Reserve’s latest figures indicate the largest one-week withdrawal amounts from U.S. banks since Sept. 11, 2001, terrorist attacks. The $114 billion represents 2 percent of the nation’s 25 biggest banks’ coffers.
One guess as to what’s going on: The Transaction Account Guarantee program, a government action aimed at protecting the solvency of smaller banks, ended on Dec. 31. TAG was a 2008 government creation that offered smaller banks unlimited insurance on money in certain accounts. The program’s end was expected to bring more withdrawals — but the smaller banks only lost .9 percent of their deposits.
Another guess: The Feds’ records are “wacky,” one analyst muses, in various media reports.