Is An ATM Cash Shortage Coming?

Tyler Durden's picture

While we have no way to confirm or refute the validity of this statement presented by a supposed ATM business insider on Steve, it does bring up an interesting point regarding how banks may be conserving "petty cash." Of course, if this perspective is true, it validates concerns about bank capitalization, and explains the reason why the FDIC recently expanded insurance on checking accounts from $250,000 to infinity in an attempt to get Americans to put their money in their friendly naighborhood bank. Of course, that this contradicts everything that the Fed Chairman is trying to do by getting Americans to spend (or buy Netflix at a 1,000 P/E) instead of putting the money in the bank, is precisely the reason why Sheila Bair's relationship with Geithner and Bernanke is, shall we say, tenuous.

From Steve Quayle (who may or may not have properly attributed the original article on Urban Survival).

"George, I work with a business partner in the [region redacted] . We have combined between us 180 ATM machines that we service, Cash Load. In order to do this we NEED to order the money, 20's only from several banks on a weekly basis. This is a considerable amount weekly, 380k plus. Here is the interesting piece that is developing: In the past several weeks 4 of the MAJOR banks have informed us that they can no longer provide us with the cash for our business. Now the problem is that it is OUR money we are taking out!

So speaking with bank "personnel" on the side my question was this, what is going on? how come we cannot take OUR money out? Answer: "they" are not authorized to hold, carry or have on hand anymore more than a certain amount of cash on hand! The amount we are getting, even though it is out of our account, they cannot order or have on hand that amount of cash at any time now. I am not talking small banks...large banks [large money center bank in America name redacted] etc...!

We can see our ability to keep these machines with available cash is becoming more and more difficult. This has taken place just in the past few weeks. By the way, these banks were willing to lose our full business due to this issue. Trying to work with smaller banks now...we will see how long!"

h/t Kyle

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goldmiddelfinger's picture

Mandy looks quite swell this morning

66Sexy's picture

this is inflationary. money leaving the banks and entering the markets.

RedwoodTree's picture

and to all you who are junking mandy, fuck you...don't you recognize a good thing when you see it?

Vampyroteuthis infernalis's picture

Just because she is hot does not make her right. For a great example, we have the Hollywood crowd.

RedwoodTree's picture

never said she was "right"...only hot.

dark pools of soros's picture

you trying to kill our last export business?

truont's picture

LOL!  Don't take away our infotainment booby babes!

TheJiddish's picture

With Christmas around the corner.....

jus_lite_reading's picture

This may just be the signal I was looking for. I have calculated that the big 12 bank's burn rate should put them in full blown liquidity crisis by the end of December. That being said, I've already closed out all accounts except for one small one to pay the bills in advance of a bank run. FIDC insurance or not, this is something of another animal.

espirit's picture

Don't worry.

More BennieBux on the way shortly.

Bananamerican's picture

that does it...

I'm chartering the 1st Official Bank of Sealy

e_goldstein's picture

will you currency be backed by box springs? ;-)

ZakuKommander's picture

Proprietary ATMs, bitchez

ZakuKommander's picture

So by suggesting that banks are limiting cash to non-bank ATM competitors in favor of the banks' proprietary machines I get junked?  LOL!

Catullus's picture

There was not enough hyperbole for the ZH crowd. You should have said "the mega banks are trying to push proprietary ATMs before the death spiral into the abyss of despare and nothingness".

Yeah. I bet the banks love having some asshole come up once a week asking for $400k a week in 20s, only so he can make most the transaction fee. Fuck that guy, put him out of business and push propietary ATMs so you can make both sides of the transaction fee.

fuu's picture

Most likely you got junked for the bitchez line. The second comment was junked because you were concerned about being junked.

New_Meat's picture

And you got junked?  Here's my theory, this is the Fractional Junking System (FJS) where the first guy gets to get junked 4 times, then the second guy gets 2**-1 times, and so on.  Had an idiot who tried to explain Taylor series in Econ many moons ago, couldn't figure it out enough to explain.

So as of 1745 EST, you have one junk.  I'm guessing ... nah

- Ned

ZeroPower's picture

Well, i suppose as long as you go to an actual teller to withdraw your money instead, then this point is moot.

Or drive-thrus. Just remember to leave that motor running, you dont wanna save gas or anything crazy like that!

still kicking's picture

If the bank locations do not have enough paper cash to give to the ATM's then how will the teller have enough for everyone not going to the ATM anymore?

I would guess this has to do with the crackdown on ATM fees the government did, instead banks will now force you to come in and charge you a teller fee which is not regulated.

ZeroPower's picture

The banks only give a 'decent enough' amount (as determined by their internals) to the different ATMs around town. They of course have more $ in vaults and centrally located branches.

tired1's picture

How about we print our own dollars, like metered postage stamps? Sure would be more convenient.

Lets Hang Parliament's picture

I bet they are having the same problem with the ATM machine in Dubai that dispenses gold bars...

Ripped Chunk's picture

If true, it should get interesting quickly.

Fed & banks usually have additional cash available in December.

hedgeless_horseman's picture

Some of my employees reprted to me last week that PULSE system ATMs in Houston were shut down at least twice in the last week.

still kicking's picture

At one point today it was up almost a dollar from opening, that's just insane, wish I had bought a lot more at $11.

midtowng's picture

If true...

It looks like just a rumor to me. I don't see this as a problem to be concerned about unless our foreign creditors shut us off. At that point we enter the "Argentina scenario". But even when that happens I still expect the government to go after the "low-hanging fruit" first - 401k's and IRS's.

New_Meat's picture

I like your targeting of the low hanging fruit: IRS's. ;-)  Let's really go after them!

But the 401k/403b (nah, they won't be included)/457s(don't know)--let's see.

That old qwm Teresa Ghilarducci:

"In my new book I propose a practical reform of the private pension system -- a mandated savings program called Guaranteed Retirement Accounts. The federal government subsidizes each account with an annual grant of $600; workers and employers share the rest of the cost equal to 5-percent-of-pay contribution (up to the Social Security cap). The federal government pays a guaranteed 3% rate of return ABOVE inflation , which with Social Security provides, on average, 70 percent of pre-retirement earnings. The $600 refundable tax credit costs nothing if we eliminate most of the tax breaks for 401(k)s and IRAs. We can keep tax breaks for contributions up to $5,000 per year, and lower the grant to $400 per year. I am grateful to the WURF Fellowship at the Labor and Worklife Program at the Harvard Law School and the Rockefeller Foundation for their support."


Who be guaranteeing what?

Thank the gods that Waxman won't be able to schedule this qwm (in an affirmative manner, so to speak) in the new house regime.

I work with some Argentines who are extraordinarily competent, underpaid on a world scale, and mighty pi.. excited about exactly this proposal in action.

- Ned





Mongo's picture

Stand in line for food stamps... debt bitchez!

cxl9's picture

I simply do not believe this story. I suspect the real issue - if there is any kernel of truth here - is either (a) the bank's funds-availability policy; and/or (b) the ATM company's credit line.

Why would there be a "cash shortage" when the banks hold billions in reserves, and anyway the Fed can just print up more on demand?

SheepDog-One's picture

All those 'billions in reserve' obviously dont actually exist. ust decimal point shifting on a screen. Bitchez.

Obama2012's picture

exactly. this is more unsubstantiated rumors from the doom gloomers wanting to poo poo on the good times because they picked the wrong side of a trade. same sky is falling bs heard whole life. get over it

Mercury's picture

Good times?

You must live in D.C.

TheDriver's picture

Yes but he's on vacation with the family in India at the moment.

Rick Masters's picture

Hey I'm relatively new to this only been following economics and finance since Lehman and the dark days but last year I believed all this doom now I feel duped for believing. The sky doesnt seem to be falling and unlike most ZH i really want things to be better. I feel some here are so political they want a collpase cause of their Obama hatred which isnt a racist hatred as some say but more an ideological one. Anyhoo, have the bears been preaching doom for eternity? Can you give me some examples of hearing it your whol life. BTW, 39 junks. Wow this site has become too polotical and close-minded. Everyone loves CD on this site, as do I, but he preaches open-mindeness and wish people took his advice.

Diogenes's picture

The world's economy is big. Like, really gigantically humongous.

Like an ocean liner that takes 20 miles to make a U turn, the world economy does not turn on a dime. It can take years for the inevitable to finally happen especially if everyone is playing lie and deny, extend and pretend.

In any halfway sensible system the whole mess would have been cleaned up years ago. Hundreds of bankers would be in prison, dozens of banks would have gone through bankruptcy and the world would be back on the upward trail with the mortgage mess behind us.

It is really astonishing that they have managed to cover up with a big smile, in spite of the millions on food stamps, living in shanty towns and homeless shelters, or still in a house they have not made a payment on in 2 years.

This does not mean the world is not in trouble. We are watching a slow motion economic Tsunami, a Hurrican Katrina that will take years to play out. The levees busted in 2007 but the government still hasn't taken action and is still playing lie and deny, extend and pretend.

Obama will still be reading off the teleprompter with a shit eating grin, even though the muddy water is up to his ears and a dead body floats by every 2 seconds.

samsara's picture

Why would there be a "cash shortage" when the banks hold billions in reserves, and anyway the Fed can just print up more on demand?


Because there AREN'T BILLIONS of PRINTED FRNs,  just digital ones.

Read my post below and the link.   The banks and ATMs have VERY LITTLE physical cash on hand. 

cnbcsucks's picture

Exactly, it's all electric money.


New_Meat's picture

And how counter-intuitive/counter-ZH is this?  This theme goes to: paper FRNs are in scarce supply.  We must bid up their value in Corn, AU, Pb, ...


- Ned

holdinmyown's picture

That's the problem ... they have to physically print mountains of paper.  Since late 2007 Fed base money has increased from $800B to well over $2T and with QE2 is about to head for $3T.  What this means is that the FED is committing to print actual physical FRNotes up to this amount to satisfy demand.  After all the promise of the FED is to exchange actual FRN for your digital USD that you THINK you have in your bank accounts.  So if they want to avoid a real run on the banks they had better start printing and fast.  There may come a time when actual physical notes are worth more than the digital cash that you have in your bank accounts and can only spend by using a debit card.  Merchants will offer a discount for actual physical notes as they will become scarce.  So hoard some dollar bills to make necessary future purchases and hoard gold for longer term savings.

-Michelle-'s picture

Remember also that notes are made of 75% cotton and think of how expensive cotton is getting...

holdinmyown's picture

You are absolutely right Michelle.  I shouldn't have said paper ... my bad ... I should have said T-shirts.

Walter_Sobchak's picture

It's about $30 for a graphic tee at the mall these days.

Mad Max's picture

Wouldn't it be ironic if the FRNs really were not worth the PAPER they are printed on...

Wouldn't be the first time in history, but the prior times didn't have happy endings.

espirit's picture

But looking at the inverse...

How many FRN's to make a pair of shorts?