Posted on July 14th, 2008 by Cliff Ames Jr.
Tell me if the following scenario sounds familiar:
Over 100 people are standing outside a bank, hoping they can get their money back. The bank had failed and now people were left wondering if everything they had worked so hard to earn and put away for a “rainy day” would now just be mud. You see the economy had taken a turn for the worse and after the hemorrhaging of the stock market the banks were starting to feel the sting of a recession.
If you think that sounds like the beginning of the Great Depression, you’re right, but it’s also what I witnessed today outside of IndyMac Bank in Torrance, CA.
I was running some errands in the area and decided to drive by the bank and see what their was to see. Needless to say I was shocked.
In Depression-Era style, people had lined up outside of the bank to withdraw their money and figure out what to do with it. “Lois” who retired from Honeywell over a decade ago said that she wasn’t sure if her money was safe somewhere else or not. “It’s a little scary to think that we’re not going to be able to get all of our money and if we get it where can we put it where it’ll be safe?” Most people in line said they’d have to put it in another bank. “Jesse,” a Navy Veteran on disability from asbestos poisoning said he had no choice but to put his money where it would collect little to no interest. “If I ever thought that this was possible I never would have put it all here. But this place offered me a great interest rate when my other bank was bought out two years ago. Now I have to trust that some other bank will keep my money safe.” The accounts offered by IndyMac paid as much as 5% interest to customers that banked with them, although that figure has been lowered for newer accounts as the economy has come to a crawl. Regular banks that offer Savings Accounts with interest usually only offer 2% or less, which is quite a large gap when you have more than $100,000 at stake.
“Bobby” and “Beverly” have a combined total of over the $100,000 that is Federally insured at IndyMac. They had arrived outside of the bank at 7:50am and found that a large line had already formed. It was about 2:00pm when I spoke with Bobby, who was sitting in the shade on the tailgate of his car. “When they opened they told us that they could only take 90 people… my wife and I were number 89.” As we talked, a large and loud security began shouting instructions at the crowd. His demeanor and tone were typical for what customers at the Torrance IndyMac branch had experienced all day. “When we first signed up they offered us coffee and snacks and all kinds of incentives. Now we’re standing out here in the heat and they’re yelling at us and won’t even give us some water,” Bobby explained. Earlier in the day some employees from Trader Joe’s across the parking lot from IndyMac brought over full carts of free water bottles to the anxious crowd, most of whom are 50 or older. Some employees from CitiBank also dropped by with juice boxes and fliers from their bank. One lady, who had been standing on her feet since 9am, needed two juice boxes and a helping had from Arturo, an employee at CitiBank. “We’re just here to help people get through this difficult time.” I asked him if felt that people would have a hard time trusting banks after today and he smiled, “That’s another reason we’re out here. We want to let folks know that not all banks have gone bad.”
However, at the front of the line, “Stan,” “Teresa,” “Deb,” and “Mia,” all had a different point of view. All four of them had been waiting since before 9am and all of them had disabilities that did not allow them to stand for long periods of time. “My parents did this 80 years ago,” said Stan, who had been offered a seat in someone’s yard chair due to his need for a walker. “They had to live through the banks going under back then and I’d never thought it’d happen again.” Deb, who was in a wheelchair and needs oxygen said that her money isn’t used for expensive trips or luxuries. “I use my money to survive. I’m a sick woman and even with health insurance I still have medical bills that are hundreds of dollars. The interest is how I pay those bills.” Now Deb faces the uncertainty of placing her money in another bank with high interest, hoping that they too will not fail. “Not only are they making us wait around, but we don’t even know if we’re going to get our money. You have to stand in line just to talk to someone.” Mia, who walks with a cane, said that she had no intention of putting her money in another bank. “I’ll just have to hold on to it and figure out what to do with it later. But at least I’ll know where it’s at and that if I need it I can get to it.” All four of them had waited over 3 hours before an official from the bank pulled them aside to let them wait in the shade. “We still might not get in today, no one has told us anything for hours,” said Deb.
At the back of the line, most people had only been there for an hour or so. “Linda,” said she wasn’t really nervous, but was hoping to get in today. “I have a lot of questions and I wanted to speak to someone in person.” When asked if she knew that the line she was in was to make an appointment for tomorrow, her expression changed. “So I have to stand in line today, in order to stand in line again tomorrow?” She asked. Anthony, a gentlemen in front of her replied, “Yeah, that’s how you can tell that the Government took over this operation. You have to wait in line, just so you can wait again.” The FDIC took over IndyMac on Friday and over the weekend it’s customers had a lot of time on their hands to worry about their futures. “It’s not like we didn’t see this coming,” Anthony added. “I’m going to three other banks today and putting it all in larger banks. I’m done with the smaller banks.” When asked what attracted him to the smaller bank in the first place he responded, “With a bigger bank comes less return and more bureaucracy. But if I’m gonna have to worry about the same thing at a smaller bank, why bother? I’m safer at a big bank.”
Time will tell if money is safer at the bigger banks or if this is just the beginning of a long line of bank failures.
Tags: CA, CitiBank, Honeywell, IndyMac Bank Failure, Torrance, Trader Joe's
