Some well-heeled New Yorkers are so worried about the fate of financial institutions that they’re depositing their cash into Shoebox Bank and Trust.
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Others say that even the increase in federal deposit insurance from $100,000 to $250,000 hasn’t convinced them to stick with banks – and they’re looking to invest in jewelry, gold or other precious metals.
Richard Cruz, 48, of Manhattan, said he’s moving money he’s saved for his daughter’s college education out of his bank and into somewhere he thinks is safer.
“I’m afraid we’re going to lose it all. I’m going to put my money into a shoebox,” he said.
Cruz said he contemplated going to the mattresses, but decided that was too “last century.”
“No one hides their money under a mattress any more,” he said. “That’s the first place people would look.”
Cruz, whose 17-year-old daughter attends Hunter College, said “they say the banks can’t mess with it but I don’t trust them.”
He even says he wants to pull out the money in his daughter’s account that she saved from her Sweet 16 party.
“Sure it’s insured,” he said, “but if the banks get hit for billions of dollars, I’ll be lucky to get even half of that.”
He’s not alone in contemplating extreme measures in light of the crisis takeovers of high-profile banks like Washington Mutual and Wachovia.
“I’m skeptical of banks. I’m seriously thinking about pulling out,” said Harlem secretary Jan Medrano.
“It seems like a different bank is closing each day.”
She hasn’t yet decided on a new home for her hard-earned money.
Fellow Manhattanite George Brown, 27, also said he’s worried – but he’s leaving his money alone, at least for now.
“With what little I’ve got, I want out,” he said.
“I haven’t yet. But I’m hoping things will get better.”
Peter Spina, founder of GoldSeek.com, a Web site that covers the metals market, said people from all walks of life are buying the shiny metal.
“You are seeing individual people with money in the bank who no longer feel safe. Integrity and trust has been ruined,” he said.
But experts insist that even in these tough times, a bank is the best place to keep money.
Pulling your savings out of your account is a bad idea, according to Gary Schatsky, a New York financial adviser and president of ObjectiveAdvice.com.
“It’s a sign of how anxious people are that they trust absolutely nothing and they’re willing to prove it by doing something that goes against their interest,” he said.
Peter Garuccio, a spokesman for the American Bankers Association, pointed out, “Not one penny of insured deposit has ever been lost by a depositor throughout the entire history of the FDIC.”
And, experts point out, shoeboxes pay account holders not one penny of interest.