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Some depositors are withdrawing extra cash in isolated cases at banks and credit unions across the country during the coronavirus crisis, prompting federal banking authorities to issue public reassurances.
The Federal Deposit Insurance Corporation insures individual bank deposits for up to $250,000.
“Our mantra is that taking your money out of an insured context and bringing it home is risky,” an FDIC spokesman said in an interview.
Neel Kashkari, head of the Federal Reserve Bank of Minneapolis, said on “60 Minutes” Sunday night that banks will get the liquidity they need to satisfy demands for withdrawals, but there is no need to bring cash home. “There’s an infinite amount of cash at the Federal Reserve,” he said.
In recent days, lines formed at some Long Island banks and credit unions, though it was unclear what transactions the customers were seeking.
At a Huntington credit union Friday, tempers frayed when cars cut into line during the wait at a drive-through that stretched for almost an hour.
On Monday, Bethpage Federal Credit Union posted a note on its website asking members to be patient despite “wait times at drive-up windows, ATMs and on the phone.”
The credit union, among the top 20 in the nation by assets, assured members that their money is safe and that “we have cash on hand to meet your needs.”
Banks and credit unions are among the businesses deemed “essential” during the shutdown ordered by Gov. Andrew M. Cuomo on Sunday. They are open.
However, several financial institutions are adjusting hours, locations and operations.
Last week, Chase said it would close about 20% of its roughly 5,000 branches nationwide and reduce the hours at the branches that remain open.
Bank of America is trimming hours at its 4,300 branches nationwide.
Bethpage FCU is allowing members to transact business in the lobby by appointment only, according to its website.
Glen Head-based First National Bank of Long Island said in a statement, “our branch staff will be required to service customers at the teller windows and drive-up windows only. ATMs are available.”
Josh Altman, a psychotherapist and associate director of Adelphi University’s Student Counseling Center, likened the impulse to hoard cash to the compulsion to hoard toilet paper that stripped many Long Island stores bare.
“It’s striking something very primal…It’s hardwired into our brains to scan the horizon for danger,” he said. “Excessive anxiety is where you’re going to see the hoarding [and] to start stuffing cash under your mattress like it’s the end of the world.”
A U.S. banking industry representative who declined to be identified said some anecdotal instances of depositors demanding large sums of cash are coming in from around the country.
He said the Federal Reserve has $20 billion cash on standby and there is no reason for bank customers to worry.
“Banks are always going to provide customers their money,” he said, noting that no bank customer has lost an insured deposit since the FDIC was created in 1933.
Several Long Island banks and credit unions declined to respond to questions about customer cash withdrawals.
While the FDIC insures bank deposits, the National Credit Union Share Insurance Fund insures all federal and many state-chartered credit unions. Some state chartered credit unions are covered by private deposit insurance.
With Valerie Kellogg and Olivia Winslow
By Ken Schachter kenneth.schachter@newsday.com @kschach
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.