Federal Reserve Reports U.S. Financial System Shaken: Recent Bank Withdrawals Unprecedented Since 911

US Federal Reserve is reporting a unprecedented withdrawals from the nation’s bank accounts. The financial system has not seen such a massive fund outflow since 9/11 attacks. The Federal Reserve reports the first week of January has shown unprecedented withdrawals to the tune of $114 billion withdrawn from 25 of the US’ biggest banks, pushing deposits down to $5.37 trillion.

Yet, U.S. stocks ended the week on a high note Friday, as investors welcomed a batch of better-than-expected corporate results.

The Dow Jones industrial average, S&P 500 and the Nasdaq closed up between 0.5% and 0.6%. The Dow finished at its highest level since October 2007, while the S&P 500 closed above the 1,500 mark for the first time since December 2007.

Analysts suggest  the quick rate of withdrawals from the nations 25 largest banks could be down to the Transaction Account Guarantee insurance program coming to an end on December 31of last year and the fact that clients may be moving their money that is no longer insured by the government.

The program was introduced in the wake of the 2008 crisis in order to support the banking system. It provided insurance for around $1.5 trillion in non-interest-bearing accounts with a limit of $250,000.00 dollars.  It was aimed at medium and small banks as the creators of the program believed bigger banks would cope with the crisis themselves.

So the current “fast pace” of withdrawal comes as a surprise to financial analysts because the deposits are slipping away from those banks which supposedly were “SAFE”.  Experts expected savers in small and medium banks would turn to bigger players come December 31 2012. 

There could be a number of reasons behind this unpredicted fund outflow of funds.. Some experts believe it has to do with the beginning of the year when the money is randomly needed here and there. Does that sound right? 114 billion needed for here and there, what exactly does that mean???

Others have concluded the funds are getting down to business and being invested. But this analysis is spectulative at best. Mainstream Media has a way of sugar coating even the most dire information, reports, and events.

Another set of data from the US Federal Reserve shows some deposits may have moved within the banking system from one type of account to another. One can imagine that all options would be presented to the public as to not make a already bad situtation, even worse.

Perhaps most Americans are not aware of the Transaction Account Guarantee insurance program came to an end on December 312012? That would mean your accounts would only be insured to $100,00.00.

The program was introduced in the wake of the 2008 crisis in order to support the banking system. It provided insurance for around $1.5 trillion in non-interest-bearing accounts with a limit of $250,000. It was aimed at medium and small banks as the creators of the program believed bigger banks would cope with the crisis themselves.

So the current “fast pace” of withdrawal comes as a surprise to financial analysts because the deposits are slipping away from those banks which supposedly were safe. Experts expected savers in small and medium banks would turn to bigger players come December 31.

Remember, the poeple with big money always get their cash out before the crisis. Could there be another crisis coming? Maybe this is just normal market action as suggested? So many unanswered questions.