Banks Stuff ATMs With Extra Cash In Fear Of Debt Ceiling Breach

[kpete]

Source: Think Progress

Banks Stuff ATMs With Extra Cash In Fear Of Debt Ceiling Breach

With just 10 days left to raise the debt ceiling and congressional Republicans threatening to force the government to default on its obligations, banks are taking some dramatic steps to prepare for the economic chaos that would result should the brinkmanship continue.

The Financial Times reports that one major U.S. bank has started stuffing its automatic teller machines with extra cash in preparation for a possible bank run from panicked depositors. The New York Times reports that another bank is weighing a plan to advance funds to customers who rely on Social Security and other government payments that could stop in the event of a default.

The FT said the moves are part of “a ‘playbook’ used in August 2011 when the government last came close to breaching the debt ceiling.” The 2011 debt ceiling episode produced serious economic harm, costing the country a million jobs and a knock on its credit rating. Despite the GOP’s stated goal of reducing spending and protecting taxpayer money, their 2011 debt ceiling hostage-taking added $19 billion in borrowing costs.

As banks dusted off their 2011 debt ceiling playbooks last week, the list of major economists sounding loud alarms about the consequences of a default was growing longer. Christine Lagarde, who heads the International Monetary Fund, said last week that failing to raise the debt ceiling “could very seriously damage not only the U.S. economy but the entire global economy,” and called a hike to the nation’s credit limit “mission-critical.” Mark Zandi, chief economist for Moody’s and a former adviser to Sen. John McCain’s (R-AZ) presidential campaign, warned that failing to raise the debt limit would bring a “very, very severe recession with no obvious way out.” The Treasury Department said the recession wrought by a default would be at least as bad as the 2008 crisis and possibly worse.

Read more: http://thinkprogress.org/economy/2013/10/07/2740301/banks-stuff-atms-debt-ceiling/

[1000words]

1. Disaster capitalism

PANIC!!!!

[Marthe48]

2. Thinking people care

Republicans don't.

[hedgehog]

3. My husband will be working in Germany next week -

his plan is to max out his cash allowance and convert it to Euros ASAP so he can pay his hotel bill!

[PatrynXX]

4. banks vs credit unions

eh don't exactly have to worry too much about a run on the credit union but on a bank empty ATM's never look good

[dixiegrrrrl]

6. There will be a run on both.

That is what people DO when they read "banks stocking up on cash in case of a run on banks"
Not to mention hearing all the alarmist tv coverage.

Here is a classic example of how runs start:

on Dec. 19, 1973, during the opening monologue, Carson joked, “You know, we’ve got all sorts of shortages these days. But have you heard the latest? I’m not kidding. I saw it in the papers. There’s a shortage of toilet paper.”

Panic buying and hoarding ensued across the United States as consumers emptied stores, causing a real shortage that lasted for weeks. Stores and toilet paper manufacturers had to ration supplies until the panic ended

http://en.wikipedia.org/wiki/Johnny_Carson#Controversies_and_feuds

I remember that incident very well..toilet paper disappeared from our grocery stores.
All because of Carson's remark of what till then was a non-existent item.

Or how about gas shortages?
Anytime a bad storm is expected down here, the first thing people do is fill their tanks.
Makes sense, since we may have to evacuate, and for sure most storms result in power outages which makes pumps not work.
But...everyone filling up at once also cuts abruptly into the supply of gas in an area, which causes.......shortages.

[1000words]

7. With ATM transaction fees, banks would fetch a tidy sum in the event of panic withdrawals.

[blkmusclmachine]

5. The End Is Near

Really.

[Caretha]

9. you are being

facetious, right?

[Ruby the Liberal]

8. This isn't extraordinary

It is very common to do 150% for the first of the month (SS and Pension common deposits) or 200% for holiday weekends. They are just going to do it every day until the 'all clear'.

Vault orders are the same. Cash on Hand works the same with vault levels as ATM.