I know I’ve been hard on the Occupy movement, but I don’t want to let the protesters think that I’m pals with all of their targets. Take the banks, for example.
The “waiting for the check to clear” scam engaged in by banks has always been annoying, but I now realize, thanks to bitter personal experience, that we have been fools to tolerate it. Once upon a time, before electronic transfers and computers, it really did take a check at least “five business days” to go from one bank to another, but the banks have held on to the fiction that nothing has changed, presumably to give them free use of our money while we patiently wait for the completion of transactions that have already been completed. Running a small business with perpetual cash-flow problems, the Marshalls constantly hectored our bank (then Wachovia, which bought it from American Security Trust, and there may have been another one in there somewhere) about speeding up the process, and in fact they did: our checks from clients often had money available to us within a day or two. That’s right—the bank let us use our own money while telling less long-standing, savvy, or persistent customers that the checks they deposited were taking almost a week to clear.
Now Wachovia has given way to Wells Fargo, just as the death of my parents is beginning to direct some substantial funds into our account, as we have directed Merrill Lynch, among others, to liquidate some inherited stocks. The household and the business were running on fumes last week when the largest of the recent checks arrived, and our assigned “representative” at the bank (Mina, whom I now realize has the same name as the woman who gets turned into a vampire in “Dracula,” and who does look awfully pale and hungry…and who replaced Katherine, whom we had carefully cultivated as our friend and financial confidante and who had promised us that she was there to stay, but who mysteriously vanished when we went to see her last week, and nobody could tell us why or to where. And boy, Mina’s smile is creepy…) told us that such a large check would take ten days or more to “clear.”
“With such a large check, the bank can’t risk making the funds available until they are recieved, just in case something goes wrong,” she told us, carefully keeping her teeth hidden. She said we might have the funds earlier than the 10 days she estimated that it would take to get the check from Merrill to “clear,” and she said we should check our account periodically. She also said that $4,500 of the six-figure amount would be available in just three working days. Why would that amount make it when the vast majority of the transfer would not? Mina was vague on that point, but we were, naively, grateful for the crumbs.
Then, yesterday, we spoke to our rep at Merrill Lunch in Boston, seven days before the date we had been told that our money would finally be in our account. She said that all the funds had been transferred to Wells Fargo, and should be in our account there now, since they were no longer in the Merrill Lynch account. “We could have done an electronic transfer directly to your account, and it would have been instantly available,” she told us. “There’s no reason the bank should be telling you the money hasn’t cleared.”
So we called Mina, and asked how it could be that our money wasn’t at Merrill but Wells Fargo was still telling us it was unavailable. She muttered something that sounded suspiciously like the double-talk Dean Martin, as the airline captain in “Airport,” gives to an obnoxious kid who has figured out from the constellations that the plane has changed course—something the crew doesn’t want the passengers to know, because the change is in response to an alert that there may be a mad bomber on board. “Due to a Cetcil wind, Dystor’s vectored us into a 360-tarson of slow air traffic. Now we’ll maintain this Borden hold until we get the Forta Magnus clearance from Melnics,” Dean says, confusing the child.
But my wife and I are not children in a 1970 disaster movie. This is a 2012 disaster movie. “What?” Grace said. “That makes no sense! How come you can let us have $4,500, and not the rest? If the money isn’t at Merrill, where is it? If Wells Fargo has it. what right does the bank have to keep it from us? Merrill says the transfer has been made; why don’t we have our money?”
“I don’t know,” Mina said, after a pause.
“I don’t know”? She doesn’t know where our money is? This is the expert response of our crack, personal, financial representative?
That’s not the most ridiculous “I don’t know” I’ve ever heard. The prize goes to Homer Simpson, in a memorable episode of “The Simpsons” in which he drunkenly authors and mails an “Up yours!” letter to his evil boss, Mr. Burns, and then realizes that he had to get the letter back before it gets read. So Homer goes to the company mail room, pretending to be his boss. “I’d like my mail, please,” he says stiltedly. “My name is..Mr. Burns.”
“First name?” asks the clerk without looking up.
“Uh..I…don’t..know,” Homer replies. Good cover, Homer.
Good cover, Mina.
She gave us the number of the bank district manager, who was hiding under his desk, and we left the following message, after explaining the situation:
“We are going to be depositing a lot of money in the next several months, and have been planning on also using your bank’s investment services. But that will be a relationship of trust, and being lied to, double-talked, jerked-around, and kept from using our own funds without any reasonable explanation is no way to embark on such a relationship. We would like a coherent explanation of why our money is not in our account, why your representative is unable to give us such an explanation, why she lied to us at the outset, and, most of all, why we should trust a bank with our money that treats its customers in this fashion.”
“While you’re at it, answer this: is Mina’s last name “Harker” by any chance, and did Katherine really leave?”
OK, we didn’t ask the last part.
But we still haven’t gotten any answers.
And the money still isn’t in our account.
Ethics Alarms 
I have a childhood friend who is an attorney at Wells Fargo. Should I ask him where the money goes?
It is said that Mark Twain once applied for a loan froam a banker who was quite proud of how realistic his glass eye looked. The banker told Twain he could have the loan if he could tell him which eye was the glass one, to which Twain allegedly said “That’s easy. It’s the one with the glint of human kindness.”
Such bullshit. The real tragedy is that you are an educated person of means. Imagine a paycheck to paycheck family. While the bank holds their money, they write checks on funds actually there, but still are forced to pay fees for supposed over drafts.
The one thing I consistently had in common with conservative friends was our disdain for the bank bailout. I’m tired of this mentality that those closest to the money should get crumbs solely based on proximity. Those crumbs add up, and I’m still not sure what they do to earn them. Personally, we’ve always used more than one bank, and are slowly but surely moving to a credit union. With technology so prevalent, I too, can’t understand why we allow this bank float scam to continue. I’ll be interested to hear what response you get from the bank…..
While the bank holds their money, they write checks on funds actually there, but still are forced to pay fees for supposed over drafts.
I outlined why banks hold the money below. Despite having the money, the receiving bank could lose it based on actions of the withdrawl bank.
Should your bank be required to float you money that it doesn’t know is definitively there? I don’t think so. That wouldn’t be fair to the bank. Now, if the user wants to use the money before it clears, it would be ethical to allow this to occur with tentative overdraft penalties. If the money clears, the penalties don’t apply. If it’s yanked back, then the penalties go into effect.
If this is truly the case, and I seriously doubt it, then banks should not be able to earn interest on these monies. Or if they do, it should go to the depositor.
When you deal with one of those “mega-banks”, this is what you get. It’s the same reason why I chose a small college over some massive university. When you’re a name and not a number, you can deal personally with people you know and who know you.
Warning: that the $4500 is available doesn’t necessarily mean the transaction won’t be pulled back as invalid. Wells Fargo, or Merrill Lynch through Wells Fargo can still yank the money out of your account….leaving you to cover any negative balance issues. Cleared and Available are very different legal terms, but tellers and customer service representatives are known to mix them up.
Why can this occur? Because the laws governing responsibility between banking institutions have not caught up with the times. While Merrill Lynch may have given Wells Fargo the money, Merrill Lynch has a grace period where they can still claim the transaction is fraudulent. If Wells Fargo claims your money is actually, legally cleared before that period runs out, and Merrill Lynch decides the transaction was fraudulent, then Wells Fargo would be on the hook for the disputed money.
Along with why it takes so long for your money to be available, this also explains why your money may be available sooner than that of a customer they have less of a history with and why only some of the money may be available. The money that’s marked as “available” is likely not yet cleared, but Wells Fargo is confident enough that it will be cleared that the benefits of allowing you access to it are worth the risk of it not clearing, and the money/time that would be required to recoup it from you.
The overall system is stupid and outdated, but it’s not directly Wells Fargo’s fault here. The regulations haven’t kept up with the times.
Note that this is greatly simplified, and the rules vary by type of financial institution and type of transaction (why an electronic transfer could be immediate, but check has a delay)..
Yes, this sounds familiar. In which case, that’s what we should have been told by Mina, if that really IS her name, not “I don’t know.” And since there is NO chance that the transaction is fraudulent (this is why I had to medallion and certify about a hundred documents to GET the money–and Wells Fargo is the one that handled the certification!!!—), I know it, the check-writer knows it (Merrill) and Wells Fargo knows it…what difference does the law that says they CAN hold it for up to 7 days, why ARE they? The law doesn’t say they have to hold it, as I understand the law. Why can’t I blame Wells Fargo for THAT?
Well both you my Boss are living in the 1970’s. Hell I just got him to give up his typewriter 5 years ago. But he still uses the dictionary to look up words when writing an email.
What tgt said.
When you transfer money to your bank by almost any means, there are varying degrees of it “being there.” In the old days, you’d deposit the check, the bank would submit it to the clearinghouse, and the clearinghouse would route it to the issuing bank or, if the bank was far away, to another clearinghouse. Eventually, the issuing bank would receive it and deduct the money from the appropriate account. If there wasn’t enough money (or the account was closed or the check was fraudulent), they’d send the check back through the system to your bank, which would take the money out of your account.
Banks had a rough idea how long it would take to hear back about a bad check, depending how far away the issuing bank was. So if it was from another bank in town, they’d let you have the money if they hadn’t received a rejection in three days, but it if was from out of state, you’d have to wait 14 days, and a check from an overseas bank could take a month or more before your bank was satisfied they weren’t going to get bad news about it.
Eventually, the clearing system got faster, but banks were reluctant to give customers their money sooner because the banks could use the money to earn interest while it was in their hands, which was very cool for them. Eventually, the government stepped in and set upper limits on the time for various types of checks to clear.
Of course, nothing prevents a bank from letting you have the money earlier than the law says they have to, and banks will often do this for good customers. That’s because you are always on the hook for every check you deposit. If the check is rejected, then you owe the bank some money.
In a sense, when you take money before the check has fully cleared, the bank is giving you a loan. They expect to be repaid when the check clears or, if the check is rejected, when you pay them back to cover the bad check. As with any loan, there’s a limit to how much the bank is willing to trust you. That’s where your $4500 limit comes from. It’s your credit limit with that bank. Or at least, that’s the limit that the person you’re talking to is allowed to authorize. If you want a larger loan — i.e. you want more of the money you deposited — you’ll have to talk to someone with more authority.
Mind you, this doesn’t let the banks off the hook. As legitimately complicated as all this may be, it’s also a great smokescreen behind which banks can hide tons of different ways to get your money. For example, if you take a $100 cash advance on a credit card, they charge you $3 fee and then maybe 12-25% interest until you pay it back. So how come when they loan you the exact same amount by letting you overdraw your checking account by $100, they hit you with a $39 overdraft fee? Because they can.
(Not all banks do. I know of at least one bank that treats overdrafts as ordinary loans and just charges interest.)
Sure, you can blame Wells Fargo for that. With all those certifications, the risk appears incredibly low, and keeping you happy would probably be worth the risk.
In general though, holding the money is the responsible position.
I can also blame Wells Fargo for the law “being out of date.” It’s out of date because banks want it out of date—if the banking lobby wanted it changed, it would be changed.
I also have to ask, under these conditions, what risk? They know it’s mu money, they know who Merrill is; the original owners of the money were even depositors. By what possible fraud could the transfer NOT have been legitimate? Prying money from Merrill is like prying a gun from Charlton Heston’s fingers. So they know the money is legit, the transfer is legit, the tranferror has verified the transfer, Well Fargo has certified all the papers its elf AND it’s received the money—which both Merrill and Wells Fargo admit could have been transferred directly into my account sans check. So “the law makes us do this” is neither logical nor true. And for “my personal banker” to say that she can’t explain the situation…utter nonsense.
It looks like my previous comment got orphaned due to being the child of a double post. It’s in response to https://ethicsalarms.com/2012/01/20/dear-banks-this-is-why-nobody-trusts-you/comment-page-1/#comment-30330.
I can also blame Wells Fargo for the law “being out of date.” It’s out of date because banks want it out of date—if the banking lobby wanted it changed, it would be changed.
I’ll agree with that, but the blame should be shared by all the banking lobby, not just Wells Fargo. I’d also save some blame for the legislative and executive branches of the last 20 years.
I also have to ask, under these conditions, what risk?
These conditions? Virtually nil, but not nonzero. Even though it’s really hard to get money out of Merrill Lynch, Wells Fargo can’t know that someone at Merrill Lynch didn’t screw up. and Merrill Lynch can still come back and retake the money.
So “the law makes us do this” is neither logical nor true. “the law makes us do this” is an oversimplification of the reasoning. The actual reasoning is still valid. I grant that in this case, Wells Fargo is being dickish, but that dickishness is likely based on bad computer algorithms of risk (Blames Wells Fargo), the employees’ lack of power (sane), and/or employees’ unwillingness to go against the book (blameworth, but understandable).
And for “my personal banker” to say that she can’t explain the situation…utter nonsense.
How many lawyers have you met that don’t understand why certain things are ethics violations? A good employee would be able to explain X, but a normal employee just knows X exists. “I don’t know why it happens. Full stop” and “That’s what the system says” are never ethical responses, but they are common.
-By all means, the banking lobby, not just Wells Fargo
-Dickishness, when it involves that much money and makes me late on my mortgage, is unethical, don’t you think? Actually, I should do a post on dickishness.
-MOST lawyer can’t explain why certain things are ethics violations, because they’ve never thought about it.
With all due respect, I don’t believe the bank’s actions are to blame for being late on your mortgage. I seriously doubt that you waited to buy a house until your parent’s passed away–knowing that there would be a substantial inheritance coming your way (not exactly ethical).
It sounds more like you’re siding with the “Occupy” movement’s message that seeks to blame someone else rather than accept responsibility for your own situation.
I run a small business with wild and rather unpredictable seasonal fluctuations: there is usually very little revenue and lots of expenses from mid-November though January. The mortgage (and everything else) is always a squeeze this part of the year; I’m blaming no one for that—it’s my choice to be in a small business without a regular paycheck. I will blame a bank that holds money I should have access to that could help with my necessary expenses on this occasion, if the money is mine. If I should be able to pay my mortgage on time easily with money that belongs to me, but can’t because of bank tricks, I am not failing to accept responsibility for my own situation to complain about the bank’s role in unnecessarily making things more difficult. That was an obnoxious inference, and gratuitously nasty.
Not that it’s any of your business, but my mother has been dead for almost a year, and there was a schedule of disbursements that was part of our financial planning, including business expenses,educational expenses,paying off debts, medical expenses and extraordinary home repairs. For various reasons related to legal issues, the check in question was more than a month late, so we were in a cash bind. I mentioned that the unavailability of the check made my mortgage late— costing me a lousy 300 bucks. Big deal. The point was that the delay, in addition to being unjustified, hurt. That’s hardly like Occupy Wall Street.
Your comment was insulting, illogical, inappropriate and unwarranted, and I don’t appreciate it. My post was about a widespread banking practice that is unethical, and I used my own experience to highlight it. I did not invite commentary on my personal financial management, which is indeed wretched but you are in no position to judge it. I was not bemoaning my station in life, which is just dandy, thanks, or claiming that I have been kept down by the system, which has generally treated me fine, as it will treat anyone of talent, creativity and diligence who is willing to take risks…and who has a little luck, and I have had more than a little. I was talking about one check, one incompetent banker, the runaround, a failure of trust, and an unethical banking practice.
You were way out of line.
Insulting? I did start my post with “all due respect” and avoided the use of derogatory or malicious language. I was just making a point.
Illogical? That was exactly the point of my response–your transfer of blame onto WF for missing a mortgage payment defied logic. There was (is) a long line of events that led up to that missed payment, none of which I was privy to know, but this single event is not the sole cause.
Inappropriate? It is my belief that this blog encourages spirited debate with a variety of viewpoints represented. My comments were on subject, thus, appropriate to the continued discussion. I believe inappropriate would be posting a url for japanese porn that is in no way associated with this site.
Unwarranted? Then don’t accept comments. Just make it a diary of your thoughts.
Out of line? I think not. Personally, I agree with most of what was said in the original post. I dislike some of the stranglehold power that banks wield and have had my own problems with them in the past. But there was a disconnect between a general assessment of banking practices and your comment, “[it] makes me late on my mortgage” describing their actions. That was not part of the original post.
1. “With all due respect” is boilerplate, in the same category as “I’d be the last one to complain, but…”
2. As I explained, I was not making an excuse. I was stating a fact: if the check had been made available to be after Merrill confirmed that Wells Fargo had the money, I would have been able to pay a large obligation on time. Obviously plenty of other changed circumstances would have also accomplished that objective—so what? I didn’t say the bank caused my cash-flow problems or that it was responsible for my obscenely high mortgage, or that it forced me to live contract to contract. That makes your comment illogical and unfair.
3. I do encourage spirited debate and tolerate all sorts of nonsense along with a lot of enlightened commentary. I do not encourage or tolerate gratuitous insults, which that comment was, “with all due respect notwithstanding.”
4. It was unwarranted because it was off topic, gratuitously insulting and unfair. Don’t tell me how to run my own blog.
5. It was out of line because the topic was banking. Your appropriate response is “I’m sorry.” I’ll accept the apology, and forget about it. Or you can get lost. Your choice.
As an officer of our bank recently told me (on a different matter involving our desire to pull our property taxes out of our mortgage payments), “We train our employees to say No because we are not a not-for-profit!” That pretty much sums up why they cannot be trusted.
Really, the employees are trained to say “no” because the employees don’t know about all the banking regulations, and they aren’t trusted to put the company on the hook for hundreds of thousands of dollars. That an officer of the bank doesn’t understand this is evidence that the policy isn’t insane. (Though a “I don’t know, I’ll run it up the chain and see if we can work with you” is a much better response.)
He ran it up the chain, right to the bank president, and after almost 8 weeks of being told “No” we were told “Yes.” Perhaps only the president knows enough about the regulations to make decisions. Let’s hope he doesn’t get hit by a bus 😉
I suspect a combination of employees not being allowed to make the change, and CYA from people who don’t want it to be their fault if a completely sane decisions doesn’t work out. The president doesn’t have either issue.
That’s why I’m a big fan of the Executive Email Carpet Bomb. When regular customer service fails and fails, you can try to find someone at the top who has the power and will to do the right thing.
Jack, in response to tgt’s “Executive Email Carpet Bomb” these might be of assistance:
tolstecl@wellsfargo.com (carrie tolstedt – senior vp community banking)
john.qstumpf@wellsfargo.com (john stumpf – ceo)
I ran into some trouble myself a few years back. Basically, nobody at WF was willing to accept responsibility for their own blatant errors. I ultimately resorted to a formal complaint with the OCC. Depends how much it means to you…
Interesting. The UK — where I am — has now, by and large, moved to same day transfers. But that may be because there’s only one bank left in the whole of the UK anyway, trading under numerous different names, this a result of the 2008 crisis.
This whole issue of when-is-something-received-actually-there? — as raised by Jack — is of particular relevance to the UK at this time: Fred Goodwin, former CEO of Royal Bank of Scotland, received a knighthood for services rendered to the banking industry but then went on to preside over RBS’ collapse and its £multi-billion rescue by the British taxpayer.
It seems increasingly likely that the knighthood, though received, may now be withdrawn.
I think I shall pass on Jack’s blog to Sir Fred — oh, sorry, Mr Goodwin — immediately. Honestly though, banks: even a knighthood from Her Majesty The Queen has no certainty of clearing. . .
I’d love to hear what he has to say, Scott.
I’m only going to weigh in here because I’ve had experience with Wells Fargo dating back to 1994….I hate them.
Jack, Wells Fargo is notoriously anti-risk. They do everything with kid gloves. My wife still maintains an account there and it just puzzles me.
Occasionally, we’ll get a check made out to me and her. If I sign it and take it to my bank….no problem. If she signs it and takes it to Wells Fargo, she has to sit there and listen to a lecture on why both people need to endorse the check in front of the cashier with ID. It’s ridiculous. They even make you sit there while they process the check into their slow, outdated system. I absolutely insist that you find a different bank.
The more important question is who the hell uses checks in the 21st century???
Well, I just sent your company one!
For my sins (of which there are many) I’ve been a national news journalist and then a poacher-turned-gamekeeper by accepting the easy money of corporate Public Relations. And what has never failed to amaze me is that though journalists are guilty of many a crime against humanity, they sure as heck know how to. . . Empathise. How to get another human being to respond positively to you. Whereas in commerce, it’s the profit, not the person, that counts.
Couple of years back, I was asked to talk to a group of supervisors working in what’s laughably described as ‘customer relations’. I asked them if they understood the difference between ‘a customer’ and an average ordinary human being. Blank stares.
Which about sums up the nub of the problem in Jack’s case. Until organisations start employing staff on the basis of how empathic they are in their dealings with others, Jack’s experience will continue to be replicated a zillion times every day.
Quite simply, his ‘advisor’ saw him as ‘a customer’. Not as a human being like herself. Had she done so, she’d have said well, OK, this all sounds a bit weird to me but let me have a look into this, talk with people further up the line who’ll know a darn sight more than I do, and then get back to you.
But she didn’t. She didn’t put herself in Jack’s place because Jack was ‘A Customer’, which is, nowadays, a sub-set, or maybe even a sub-species, of homo sapiens.
Regardless of whatever arcane procedures may or may not be in vogue at Wells Fargo, the bank owes its customers far more than mere efficiency in its transactions: it owes a duty of care. And the first step towards that is to stop treating them as ‘customers’ and start treating them as human beings whose justified anxietites and confusions are best sorted via clarity, not obfuscation, and by honesty, not scripted finessing.
1. sorry you interpret my respect as boilerplate.
2. my comment was not illogical due to your invalid conclusion. if you had said “WF caused my hamster to die” i would have called you out in the same fashion. had you said, “WF (hindered, affected, reduced) my ability to pay my mortgage on time” then no harm, no foul
3. if i’d wanted to insult you i would have done so in another manner.
4. not off topic. your post was about banking and began with a reference to the occupy movement. i was only drawing a parallel distinction.
5. “except?” or “accept?”
you’ve previously mentioned that you never “agree to disagree” because that is where we’re at now–an impasse. frankly, i feel that your original post was a rant fueled by your anger (rightfully) towards WF. i think you’ve misplaced some of that emotion on me.
1. That’s no apology, as you know, and being a wise ass as well.
2. Lame. And I suspect you know it. The is nothing inaccurate or unethical about “but for” statements when they are true. “But for the traffic jam, I would have gotten my son, bleeding from the gunshot wound, to the hospital in time to save his life.” That is not blaming the traffic for the son’s eventual death.
3. It was an insult whether you intended it as such or not. I was insulted, and reasonably so.
4. I’ll grant you the parallel explanation, but it was still inappropriate and unfair.
5. Accept. Except that I don’t accept whatever this is.
6. That was no rant, and I was not even slightly angry. And its no impasse, because I make the rules here. I found your comment insulting, disrespectful and offensive, and you gave me this nonsense, blaming me for your obnoxious and presumptuous statement. You owed me an apology, and I gave you a chance to give me a sincere one. I don’t have to put up with trolls and jerks if they don’t contribute enough to justify it.
7. Bye.
I apologize to Greg for this. Clearly, I over-reacted, and I don’t know why, exactly. I still don’t like his comment, and I disagree with his inferences, but that’s nothing unusual here, and I allowed the exchange to get personal, and that wasn’t Greg’s intent. I was unfair, and I want everyone to understand that I was the jerk in this disagreement, not the commenter. I’ve also apologized to Gregory privately, and he was very graceful about it, for which I am grateful.
If you ask any bank, they will tell you there is a single simple solution to every problem you could ever have with your account – carry a higher minimum balance.
That’s really crazy. I think I’d be looking for a new bank. The bank we use in the US ( a regional bank in the South) recieved and processed a large international transfer in three days. I thought that was the norm. In New England I used Soveriegn Bank with no problems, but that’s quite a while ago; even so, I haven’t run into a bank that does things like this. If the money is no longer at Merryl Lynch it should be in your account. That’s really strange. I don’t have any tips on a good bank, but from what I’m reading on line the past year or so, I’d say stay away from BoA, their security seems to be lax.