Bank Warns Customers It May Refuse to Honor Withdrawals

Imagine that!Changes in recent Federal Regulations allow banks to refuse withdrawals for 7 days in order to prevent a potential old-fashioned run on banks.Citigroup was one of the first banks to issue the warning, stating Federal Regulations now require it to do so.

This story, comes on the heels of another disconcerting bit of news that Money Market Fund account managers now have some autonomous powers to suspend redemptions in the event fund losses cause the buck to break.Prior to this, SEC authority was needed to take such action.

Is it a setup?Are these new regulations made in anticipation of a run on banks, money markets, cash in general?It is reported that the FDIC, which insures these types of accounts, only has $50 billion to cover near $1 trillion of deposits.That's like buying $5,000 of homeowners insurance on a $100,000 house.Why bother?

While Citigroup says they have never exercised the right and have no plans to do so, I still find this troubling.First, the notion that someone can tell me whether or not I can have my own money bothers me.Secondly, why change the regulation if there is not some perceived need to do so?And, lastly, hearing this kind of news just makes me believe I should at least have grocery money in my own reserves, in the event of a lockdown on cash accounts.

And then let's get a little greedy.If ever this event came to pass, how valuable would a few gold coins, a few American Eagle Silver Coins or even scrap gold become, if cash was on hold?It seems gold and precious metals are constantly taking on roles other than as an inflation hedge or insurance against failing currencies.

I'm sure we haven't heard the last of this one.