WASHINGTON (1/24/13)--Clients of the biggest U.S. banks withdrew their funds in January at the quickest weekly pace since the Sept. 11 attacks in 2001.
For the week ended Jan. 9, net withdrawals at the 25 biggest U.S. lenders tallied $114.1 billion, which drove deposits down to $5.37 trillion, according to data compiled by the Federal Reserve last week (Bloomberg.com Jan. 23).
At year-end 2012, deposits were roughly $5.4 trillion--the highest monthly ending total during the year and $500 billion more than at the end of 2011, Fed data indicated.
Some banking industry analysts posit that bank customers may be moving their money as a result of the expiration of the Transaction Account Guarantee (TAG) program, which was set up during the financial crisis to guarantee non-interest bearing accounts above the federal share and deposit limit of $250,000. The program expired Dec. 31.
A TAG extension was hotly pursued by bank trade groups, but was opposed by the Credit Union National Association. CUNA had criticized the TAG extension by noting the program already has cost the FDIC nearly $2.5 billion. The defeat of a bill to extend TAG was noted as a significant victory for CUNA and credit unions by press outlets.
Also, for the two weeks ended Jan. 8, banks reported total money-market-fund assets climbed $70 billion to $2.7 trillion, according to money-fund research firm iMoneyNet in Westborough, Mass. Assets fell to $2.69 trillion in the week ended Jan. 15.