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Man Pulls $1 Million from Bank of America But Completely Misses The Point

A former Harvard professor has been making headlines after announcing he was pulling over $1 million from his accounts at Bank of America (NYSE: BAC  ) . 

The professor cited the Federal Reserve's zero interest rate policy as the primary reason why. He blames the policy for the economic problems in the emerging markets and sees a major pull back for U.S. equities. 

And then the professor stops making sense. He then jumps, preposterously in my view, from emerging market volatility to a full scale run on the major global banks. He's putting his money where his mouth is at least.

Breaking down his logic goes something like this:

  1. Emerging markets are having a hard time because of the Fed's policies
  2. Global banks have exposure to emerging markets
  3. Global  banks are heavily affected by monetary policy, more so than other industries
  4. We should reduce our exposure to emerging markets and global banks

But Bank of America, and certainly Wells Fargo (NYSE: WFC  ) , have little to no exposure to the emerging markets -- so why pull money from there? Citigroup (NYSE: C  ) perhaps, as international markets are a cornerstone of the bank's long term strategy. JPMorgan Chase (NYSE: JPM  ) is also fairly committed to doing business globally.

But how would weakness overseas or even a bear market at home put a checking account at risk? There is the whole "too big to fail" thing, and lest we we forget, the FDIC exists to backstop exactly the run on deposits he predicts. Even though the FDIC backstops only $250,000, the professor could simply divide this money among 4 institutions and be completely secure. 

Watch the video below to find out the full story-exactly what the professor said and exactly why it doesn't make sense. Investors, perhaps, should take note -- but depositors have nothing to fear.

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Read/Post Comments (89) | Recommend This Article (76)

Comments from our Foolish Readers

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  • Report this Comment On February 16, 2014, at 1:11 PM, anniek wrote:

    It's good to see how a Harvard education makes someone a smart investor. For the .05% he's getting on his " million dollar investments" he'd be better off stuffing his mattress with it. What a waste of an expensive education.

  • Report this Comment On February 16, 2014, at 1:40 PM, ObamaTheYahoo wrote:

    The professor knows exactly what he is doing. If he were smart, he would convert his soon to be worthless paper fiat debt notes and buy tangible assets such as gold, silver, land etc.....anything but paper currency.

  • Report this Comment On February 16, 2014, at 2:09 PM, GateKeeper wrote:

    Jay, actually FDIC only covers one account for a single user even if invested in different institutions. Each account requires a different owner which can be established by a series of LLC's distinguished by unique FEIN numbers.

  • Report this Comment On February 16, 2014, at 2:09 PM, masivecrash wrote:

    I tell you what Jay Jenkins when you pull more than one million out of your banking account you can tell the former Harvard professor what to do.

    You really look like a Fool and not the Motley kind!

  • Report this Comment On February 16, 2014, at 2:19 PM, squirl033 wrote:

    "Bank of America, and certainly Wells Fargo (NYSE: WFC ) , have little to no exposure to the emerging markets -- so why pull money from there?"

    you mean, aside from the fact that big commercial banks - all of them, not just these three - are predatory organizations run by greedy swindlers who are largely responsible for the recession? or that they pay effectively zero interest on savings, but charge outlandish rates on credit cards? or that they nickel and dime consumers to death with a constant barrage of ridiculous fees and charges? while i have nowhere near this professor's fortune, even if i did, i wouldn't put any of it in a crooked commercial bank!

  • Report this Comment On February 16, 2014, at 2:42 PM, firehawk56 wrote:

    To view our major banking institutions as invincible as Jay describes is a big mistake... I probably wouldn't agree with emptying all your bank accounts but it makes more sense to simply diversify your investments to protect your future... If the recent past has taught us anything our banking system is anything but solid. How much difference did all those fdic guarantees make a few years back when all these very same banks asked the government for a bailout? And I noticed that other recipients of those type of bailouts were required to pay back what they borrowed... usually with interest.... yet these very same banks are still in business and have yet to repay a single dime back to the government. There have been some settlements which re payed some of the money lost to investors but I for one would like to know why when america in essence bailed them out they failed to invest in america... if they had the things lost when the bubble burst in 05 would have been replaced already and that has not happened. where do I go to get a


  • Report this Comment On February 16, 2014, at 2:45 PM, reddalek wrote:

    They're all backed by FDIC insurance and are completely safe......LOL.

  • Report this Comment On February 16, 2014, at 2:52 PM, TMFHurricane wrote:


    Per the FDIC:

    How much insurance coverage does the FDIC provide?

    The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

    The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank. For example, if a person has a certificate of deposit at Bank A and has a certificate of deposit at Bank B, the accounts would each be insured separately up to $250,000. Funds deposited in separate branches of the same insured bank are not separately insured.

  • Report this Comment On February 16, 2014, at 2:54 PM, buoy1 wrote:

    The reason to pull money from BofA, wells fargo and the others is because they are scum, and treat the little guy like donkey droppings. Go with a local, or at least a bank that only operates in your state. Here in Austin it would be "Eagle" local, or "Frost" state. I go with Frost.

  • Report this Comment On February 16, 2014, at 2:59 PM, usadone wrote:

    One word nationalization, Chase is already putting withdrawal limits on business accounts. Other countries are starting to nationalize retirement accounts because of their federal deficits. There is nothing that's driving this American economy and the eroding of the middle class is already happening. The fed buying bad debt is a shame artificially propping the market. When one keeps his ear close to ground and eyes open there are pieces of the puzzle that starting to form the big picture and it's not encouraging but quite alarming.

  • Report this Comment On February 16, 2014, at 3:00 PM, apnapoli wrote:

    I think this man's smart to pull his money from a major wall street bank and diversify away from US Dollars. Just because a major bank is "backed" by the government doesn't mean it's safe.. In the event of a bank run, there's no possible way a government would be able to insure all the accounts of one major bank, let alone all of them! Because of the repeal of the Glass-Steagall Act in the 90's, these aren't just commercial banks, but now hybrid banks of investment/commercial status. In other words, they take deposits and use them to game the market with derivatives, risky investments but additionally some safe investments.. I keep most of my wealth in a couple different currencies, and some silver futures contracts. These investment/commercial hybrid banks will go bust again, and I think it's smart for any investor to hedge against this possibility with other currency and/or precious metal. At worst, if you diversify, the losses won't be too substantial that you'll incur in the event of another bank run/bust, 2008 style..

  • Report this Comment On February 16, 2014, at 3:15 PM, comnsense wrote:

    Why would one keep 1 million dollars in a chcking account anyways. And he teaches economics?

  • Report this Comment On February 16, 2014, at 3:16 PM, buoy1 wrote:

    Why do I have to watch some 30 minute video that includes your freakin life story and that of your dog to get the information you offer?

  • Report this Comment On February 16, 2014, at 3:24 PM, gjsuhr wrote:

    If a professor has $1 million to pull out of a bank, does that help explain why college has become so expensive?

  • Report this Comment On February 16, 2014, at 3:30 PM, princelaife wrote:

    The professor is right and doing the right thing. Take out his money before those bank closed out and will left him with nothing except his FDIC insurance of $100.000. 00. Go for it Professor. You must be reading the signs very well. I will do the same if I have that in the bank. I rather have it under my billow than losing it all.

  • Report this Comment On February 16, 2014, at 3:37 PM, Weed1959 wrote:

    First I don't trust anything government, FDIC could be changed in a heartbeat by non other than government. By the way how is all that borrowed SS funds being paid back by the again government? LBJ started putting IOU's for our SS fund, I'm waiting for the borrowers of my money to start paying back. I paid from my first check at 15 till now still paying 64 and expect any day for our government to say sorry we just don't have it to pay. So after all those trillions in IOU's were still in 17 trillion in debt. Do you really trust this government FDIC? If so I have some beach front land for sale in the middle of the desert.

  • Report this Comment On February 16, 2014, at 3:51 PM, carjunk001 wrote:

    gjsuhr has the right point, why does a former Harvard professor have a Million dollars laying around to pull out of a bank, unless he made it actually doing something useful, instead of twisting the minds of our youth.

  • Report this Comment On February 16, 2014, at 3:59 PM, alex1af wrote:


    The FDIC has less 1% in cash reserves to cover all deposits. Undoubtably, the Fed will bail out the FDIC. When that happens the damage will have already been done. Due to the massive inflation it will cause.

  • Report this Comment On February 16, 2014, at 4:09 PM, ignorantorfool wrote:

    so if the banks fail, and fdic is backed by a borrowing government, who is insured really

  • Report this Comment On February 16, 2014, at 4:09 PM, Disgustedman wrote:

    I doubt millionaires read this stuff.

  • Report this Comment On February 16, 2014, at 4:33 PM, WaffenSS wrote:

    What is going to be valuble is ammunition, gold silver, staples(rice, flour, sugar, salt and legumes, etc..) The powers that be has made saving money unattractive and "investing in the "stock market" the alternative. This is an arena where one's money has absolutly no protection from cokehead wall street slime. The US government is in collusion with this scum. The recent 2008 meltdown was a move to strip the wealth of 80 million baby boomers(1/3 of the US population), rendering them impotent as a political force. (Money is power.)

  • Report this Comment On February 16, 2014, at 4:37 PM, SSBN620 wrote:

    You can bet he threw their fractional reserve way out of whack for a while, and probably caused a few ulcers to flare up at BofA. Maybe a good time to look at Tums and Rolaids stock...

  • Report this Comment On February 16, 2014, at 4:37 PM, ugo wrote:

    From the comments I see here, it seems like readers think 1 million is a lot of money and the bank will even notice it. Nowdays a million is not really that much at all. Plenty of modest households in surburba USA would be in the range.

  • Report this Comment On February 16, 2014, at 4:51 PM, fellowprofessor wrote:

    You all missed the point. Harvard professor has nothing against the banking institution not even a local bank where he deposited his money with. Professor was just trying to impress a new "GIRL" in town. Seriously, why withdrawn one million dollars? He could have written a check for all his life savings and give it to the “LADY” to proof his love and his prudent with money …This is a secret message, all of you people missed it. He’s no damn fool. She’s not a fool to do a damn thing about the check. What can one million dollar buy you in this day and age? Hot dogs, maybe a 12 months prepaid burger king supplies. Perhaps 2weeks sleep W.H without launch or benefit or perhaps at very 55stars hotel in Manhattan.

  • Report this Comment On February 16, 2014, at 4:55 PM, tc84 wrote:

    Jay you are either a complete fool or a mouthpiece for the mega banks...Either way you're completely missing the point, which is: The FDIC has 25 BILLION dollars in insurance...which sounds great, until you realize there is 9.3 TRILLION in bank deposits!!! So for any one person, yea they might be covered, until a banking crisis hits and everyone wants their money, then the FDIC fails in a millisecond...and don't try to say 'oh that will never happen' because it has and will again....Also don't forget the US banks have roughly 300 TRILLION in derivative exposure which I'm sure you will tell me is "completely hedged". HAHAH! Well at least this article is good for a Sunday chuckle.

  • Report this Comment On February 16, 2014, at 5:24 PM, Rifleman3006 wrote:

    Old News!

  • Report this Comment On February 16, 2014, at 5:25 PM, Pilm wrote:

    The first thing I have to wonder is what took him so long to come to this decision, I mean it's been almost 6 years since the banking crisis! And where is he putting his money, isn't that really the million dollar question!

  • Report this Comment On February 16, 2014, at 5:30 PM, DavidPerrins wrote:

    The FDIC can't cover a bank run, they are short the cash to the power of many magnitudes. The fed could replenish base money if people pulled green dollars out the banks. Ultimately though, a bank run in America would be deflationary, so the Harvard professor just moved up a level of safety on John Exter's pyramid. Smart move.

  • Report this Comment On February 16, 2014, at 6:05 PM, Blknblue wrote:

    The ignorance of this liberal web site is staggering. The issues the Professor is concerned with is a complete economic collapse. The FDIC will be useless at that point. And a currency reset normally cost your 60% of your value.

  • Report this Comment On February 16, 2014, at 6:25 PM, willy325 wrote:

    And as a professor he is obviously paid much too much. Fire the dolt. He is worthless.

  • Report this Comment On February 16, 2014, at 6:31 PM, monkeyfurball wrote:

    $1 million? Why is that such big news? You can barely live on that amount for 7 years after retirement.

  • Report this Comment On February 16, 2014, at 6:42 PM, FireBreather wrote:

    FDIC has only enough to cover MAYBE 20% of Deposit's...........Disappointed in Motley .... seems like you've become some gubbament shill in promoting the bogus fallacy of recovery. USA is BROKE and there's NO WAY OUT.

  • Report this Comment On February 16, 2014, at 7:01 PM, Johnnysinn wrote:

    So the guy pulled $1 million from a company with billions in deposits. I am sure that will impact BOAs bottom line in miniscule way. My guess is that upper management has no clue who the guy is or even care.

    BTW, even at the paltry rate of 0.05%, he earned 5k on his million. Money is money.

  • Report this Comment On February 16, 2014, at 7:12 PM, RMiddlebrookIV wrote:

    Gold and silver. Art, cars, property. Those have been currency sense before language. Lead, at least for the last 150 years.

  • Report this Comment On February 16, 2014, at 7:17 PM, bubbagump001 wrote:

    This is a true story of how BANK OF AMERICA operates:

    Wife has a credit card with them - usual high interest rate.

    Charged some items, not much, a few hundred.

    Waited for the billing statement to arrive.

    Statement arrived indicating that $XYZ.00 was due by so and so date. Typical credit card bill.

    The amount was paid in full and entire 2 weeks prior to the due date.

    Next month arrives. Another bill from BANK OF AMERICA credit card company.....

    This time it is for 92 cents. (not a fabrication)

    This bank found the means (daily compounded interest) in which to take another drink at the swill, even though the full amount they demanded was paid a full 2 weeks prior to the due date.

    This BANK OF AMERICA spent more than 92 cents in postage, paper, and people to send a bill for that amount.

    Idiotic. Yet - if not paid, BOA would have placed a bad credit mark on my wife's credit report for less than a buck.

    BOA, and other mega-monster-sized banks operate much the same as the United States government or the United States military.

    Lack of inter-office communication, overall stupidity and politics at the top, demeanor and look down attitude towards the "common" person.

    This Bank charges 22% interest on their most sacred credit card.

    I, most unfortunately, have my mortgage with these "MOTLEY FOOLS", which I could escape from at light speed. The stupidity and arrogance that I have had to deal with over the past 11 years with this bank is beyond frustrating.

    Yet - this bank, which has NOTHING in common with the United States of America, other than by name - continues on, even considering all of its grievances and federal criminal charges and civil complaints against it for various nefarious deeds.

    The very *LEAST* this government can do is to make them conduct a name change. This bank does NOT represent "AMERICA".

  • Report this Comment On February 16, 2014, at 7:17 PM, lilwillow3 wrote:

    There is no such thing as no risk. Walking around with a million dollars is not safe. Buy some diamonds? Not, due to volatility and mugging risk. Stocks? Not without risk. The best thing that could happen to this guy that would make him feel better is to just be broke!

  • Report this Comment On February 16, 2014, at 7:18 PM, Joe101 wrote:

    He has a you???

  • Report this Comment On February 16, 2014, at 7:19 PM, bubbagump001 wrote:

    I await for Bank of America's "bankruptcy".

    Anyone else care to sign on?

    This is one bank that "we the people" do not need.

  • Report this Comment On February 16, 2014, at 7:27 PM, bubbagump001 wrote:

    Remember - this Bank of America is the one that bought out COUNTRYWIDE HOME MORTGAGE, and all of its associated distressed (read as fraudulent) lending notes.

    BOA was so busy back in 2008-2009 foreclosing on people, some of which they had no documentation on, no complete paperwork from Countrywide - they had Robo-Signers kicking families out on the street by the tens of thousands.

    One story still sticks: a guy had his mortgage with BOA entirely PAID OFF - and they still came after him. Processed papers to toss him out of his own paid in full house.

    He had to hire legal defense at his expense to defend his property rights against this "monster".

    Have they "cleansed" themselves of all the *dead weight* mortgages they assimilated from Countrwide Crooks & Co, or is there going to be another round 2.0 in this foreclosure phase?

    BOA is not the only one - there are horror stories aplenty from many other mega-banks.

    Don't even get me started with JP MORGAN CHASE and BERNIE MADOFF.......

    Sgt. Schultz defense: "I KNOW NOTHING..."

  • Report this Comment On February 16, 2014, at 7:33 PM, altha2008 wrote:

    All he had to do was to open 4 accounts with $250,000 in each one.

    put one in his name, one in his and his wife name, two more in other family members name and his name making him the only one who can withdraw the money.

    Forget putting your money in Gold and Silver, put it in tax lien certificates earn 18% interest in Florida

  • Report this Comment On February 16, 2014, at 7:35 PM, sluggo47 wrote:

    All of you 99%rs that think this prof did the right thing are truly Motley Fools of the dumbest kind..with all due respect.

  • Report this Comment On February 16, 2014, at 7:37 PM, sluggo47 wrote:

    Having 1M in a checking account proves that this Harvard educated gent is not playing with a full deck.

  • Report this Comment On February 16, 2014, at 7:56 PM, AlmostRetiredNow wrote:

    Considering that he is a Harvard professor you'd think he would be much more knowledgeable how to properly invest that money so it works for him. .05% interest is NOTHING!

    What he should do is withdraw all of his million dollars and then buy BAC stock with it (or any good Blue Chip stock for that matter).

    I've held BAC since the big drop in 2009 when I bought it at around $3 per share. Now it is worth $16.70 per share. Had he bought BAC when I did, his million dollars could have bought 333,333 shares which would be worth $5,566,666 today. 5.5x return in 5-years! He could actually afford to retire today.

  • Report this Comment On February 16, 2014, at 8:05 PM, hostdude wrote:

    What lala land is this writer living in? Does he really think your money is absolutely secure? First of all, the professor is right in that the ZIRP policy acts as a tax on anyone who is dumb enough to keep their money in a checking account - basically, they lose money once real inflation is calculated in. The fed has been doing their level best to insure that people push their money into riskier asset classes than a silly bank account.

    Secondly, Europe is already talking about a bail-in for banks from consumer savings account. The IMF is talking about a 10% "wealth tax" to be imposed on all financial accounts. Our own country is trying to entice people into trusting it with money for retirement. More and more countries are starting to impose currency controls (Italy being the latest). Are you really naive enough to think that if there needs to be another bailout of the too big to fail banks that the government will just print another 3-4 trillion to cover it? That $250k "guarantee" is basically meaningless if people stop believing in the fed and that time is probably closer than many think.

  • Report this Comment On February 16, 2014, at 8:16 PM, specrose wrote:

    bank of America aint to smart.they seem to loose there best customers and gang back the america shure did me dirty.i don't have no pitty on them.

  • Report this Comment On February 16, 2014, at 8:23 PM, Rifleman3006 wrote:

    bubbagum - You are a typical loser who is full of BS for one. Number two, I'm sure you lost your teller job and are now just sorry a$$ grapes.

  • Report this Comment On February 16, 2014, at 8:51 PM, jcar01 wrote:

    The best thing that you can do in the current economic situation that America and much of the world is in is to take your money and buy tools, medicine, food staples that don't ruin like dried beans and rice, dehydrated food, etc. Gold and Silver is good but you can't eat it when the grocery stores are empty and even if you had a wheelbarrow full of $100 dollar bills you couldn't buy a loaf of bread. The people that will survive this are the ones that have seeds to plant a garden and the knowledge on how to live off of the land through agriculture, hunting, fishing, etc. Bartering is going to be the only way to get what you need and if you have items that are in need like tools you can loan out, etc., you will be ok. Don't forget that you're going to need guns and ammunition to protect your family and your possessions because those that haven't prepared or are starving will come and try to take your possessions and your life if you aren't prepared.

    There's a really good author named Jim Marrs that has written extensively about how corrupt and dangerous the powers that be in the United States have become. The current liability of the United States with unfunded liabilities like Social Security, Medicaid, Medicare, etc., that they've raided the coffers of is in excess of $200 Trillion dollars. Do you really think that we're going to be able to dig ourselves out of this hole without a reset? And then we've got Obama and his Liberal / Communist friends who are trying their hardest to destroy our nation and running up the debt even more. We're in for a rough ride. I pray for our children and grandchildren.

  • Report this Comment On February 16, 2014, at 8:52 PM, jcar01 wrote:

    Forgot to add the link to Jim Marrs:

  • Report this Comment On February 16, 2014, at 8:54 PM, BuyLowBandit wrote:

    This writer does not seem to understand the main point, and instead addresses supplemental points made by the professor. The withdrawal was based on the lack of reason to keep cash in a checking account, because there is no real interest being paid, and so even if the risk of failure is minimal, the risk/reward profile is poor. FDIC insurance does not cover $1 mil. There is certainly nothing fooling about not keeping such a large sum in a checking account. If anything, keeping so much cash in a checking account is an absurd idea.

  • Report this Comment On February 16, 2014, at 9:02 PM, Arthasidd wrote:

    harvard professor had

    $1m in bac account yielding .5 % interest..and pulled it out prove a point...what's the point?

    BAC stock was up approx 25 % in the past 12 months, WFC was up approx 30 %

    JPM , up approx 20 %

    C was up about 15 %...and all these sticks paid a dividend ...With that kind of money in a bank account that's paying approx .5 % seem his education didn't prepare him for investing wisely.

  • Report this Comment On February 16, 2014, at 9:10 PM, BrutlStrudl wrote:

    BOA may not be exposed to emerging markets but it is exposed to other banks that are. I think I'll mosey on down to my bank come Tuesday.

  • Report this Comment On February 16, 2014, at 10:11 PM, FranciscoPapia wrote:

    Open an account in Costa Rica with the Banco de Costa Rica, Banco Nacional, or any of the other state banks, as they are paying 2.5 percent on dollar accounts and 6.5 percent on the local currency accounts.

    However, be prepared to prove to the foreign banks that the money is ‘clean’ which may involve your banks notary public and your states notary public providing the documentation. Then the IRS steps in and demands Form 8938 and FBAR Requirements.

    Additionally, the Costa Rican banks are beginning to think about disallowing U.S. citizens from owning accounts in Costa Rica because of the IRS/FEDS infiltration of their business.

  • Report this Comment On February 16, 2014, at 10:58 PM, PLD777 wrote:

    can't say that I blame the professor a banks job is to safeguard and make money for its patrons through wise investments currently the only thing I have seen the banks do with our money is to line their own pockets it is past time for a return on our investment

  • Report this Comment On February 16, 2014, at 11:00 PM, Michyle wrote:

    Actually the man was smart.

    The FDIC will replace $250,000 and you have to eat the rest.

    So he saved $750,000

  • Report this Comment On February 16, 2014, at 11:23 PM, satcheluk wrote:

    I keep seeing misinformation printed here, so I thought I'd chime in. I'm a Financial Advisor and you can have $250k in accounts with as many institutions as you can find. As a matter of fact, at ML we were able to insure up to $1mm of our clients' assets since we had 4 separate banking institutions in our conglomerate. Be careful who you believe.

  • Report this Comment On February 16, 2014, at 11:54 PM, funfundvierzig wrote:

    Why in the world would you bank with the most fraud-infested financial institution in the country in the first place? Bilk of America? ...funfun..

  • Report this Comment On February 17, 2014, at 12:00 AM, mrcardio79 wrote:

    Bank of America is easily one of or THE most scandalous bank in America. I highly recommend anybody with an account with those scum bags to close their account "s". Find a good Credit Union as I did.

  • Report this Comment On February 17, 2014, at 12:30 AM, spinod wrote:

    "Cost of schools causing tuition prices to go up"

    Professor pulls 1 million frigging dollars from his bank account and nobody says anything?

  • Report this Comment On February 17, 2014, at 12:40 AM, lastword wrote:

    After rising inflation and lousy interest rates most savers are losing value on their cash holdings every day it's in the bank. Go Capitalism!

  • Report this Comment On February 17, 2014, at 12:45 AM, funfundvierzig wrote:

    Why would the good Harvard professor be dealing with such a brazenly corrupt bank, Bilk of America, when there are perfectly reputable community and regional banks down the street? For example, Brookline Bank, Cambridge Savings Bank, Peoples United, BB & T, TD Bank, undsoweiter...funfun..

  • Report this Comment On February 17, 2014, at 1:16 AM, NakP wrote:

    Smart move by the professor. Bank of America has a derivative exposure of $50.135 Trillion dollars, in event of a credit event depositor funds can be legally taken to cover BofA’s losing positions. Depositors will have to go hat in hand to the FDIC and beg for their money and good luck with that once $700 trillion of derivatives are triggered, the FDIC’s $40 billion of funds will not be able to cover the losses.

    The Bankruptcy Act of 2005 Insolvency Rules for Financial Contracts

    In order to reduce systemic risks, however, both the Bankruptcy Code and the FDI Act have long provided exceptions from many of these restrictions for certain defined financial contracts—securities contracts, commodity contracts, forward contracts, repurchase agreements and swap agreements. In the FDI Act, these contracts are defined as qualified financial contracts, or QFCs. The statutory safe harbors allow parties to these contracts, with some exceptions, to terminate and net their exposures and liquidate any pledged collateral to protect them from losses that could result from market fluctuations if the counterparties were subject to lengthy insolvency proceedings.

  • Report this Comment On February 17, 2014, at 1:45 AM, Proficy wrote:

    He's did the right thing, paper is a dead asset. Someone said 1 million isn't that much money? Try withdrawing that much cash from your bank. Try $10,000 and see how nervous the branch manager gets, they may tell you to come back another day. There is no money! It's been leveraged so many times it doesn't exist.

  • Report this Comment On February 17, 2014, at 2:04 AM, mansourg54 wrote:

    Dear Harvard Professor,

    Follow the examples of another professors, Jeremy Siegel and Ben Bernanke and put your money in ALTRIA (MO) shares.

  • Report this Comment On February 17, 2014, at 2:09 AM, mansourg54 wrote:

    $10^6 buys you close to 28400 shares of MO which pays $1.92/shares and gets you safe and secure close to $54400,- annually which is almost half what a Harvard professor makes.

  • Report this Comment On February 17, 2014, at 2:29 AM, Diagda wrote:

    So laughable being angry at the President because of the soft tapering program first off all that money TAXPAYER money should have NOT been directed to back foreign investments in the "emerging markets" to begin with ! Creating economic harmony overseas in a love in fest of creation of jobs overseas and tax deferred profits brought back here and ZERO investment from Obama in domestic programs or job creation here nothing even close to the monthly amount of u.s. treasury funded backing with ZERO interest for them but NO zero interest on the future of America here as in college students I have a message for you jerk offs when these people graduate you will receive NO mercy and NO zero interest anything when that day comes you Wall Street creeps better have your golden parachutes ready because the game will be OVER and yes you will wonder why the u.s. shifted to a hybrid social capitalism society with a conscience ? Because had you guys lobbied for a fair shared approach to where investments would have been spread out through out the Main Street matrix more evenly versus I got mine mentality we wouldn't not be headed right now , as for Obama he could care less talk is cheap he got his and he is on his way out if you doubt me look at his donor base and the amount of money they outpaced anyone period in flushing Obama's coffers why? Of course it was all in the 84 million or billion a month kitty bag of goodies from the treasury to the commerce dept. indeed.

  • Report this Comment On February 17, 2014, at 5:59 AM, Gripper2 wrote:

    Of course, I could be wrong about what I believe his intent is, but I believe the point he is trying to make is being missed by the author of this article and many of the commenters.

    He certainly knows his money was insured. He is well aware that his money will not accrue as much interest as it does in a financial institution.(Almost, but not quite). He also, must know that his actions and statements are conflicting.

    I see his intent as trying to get everyone to stand up and take notice of the current situation, which he seems to have accomplished.

    I had the same idea a year ago and began withdrawing all of my money spread across 3 accounts, but the killing of Bin Laden somehow overshadowed the impact that I had when I closed my prepaid debit card account, my chain letter position and recalled the Amway products I ordered amassing a grand total of $157.23. Minus the $2.50 ATM transaction fee of course. Unfortunately, word got out in the neighborhood that I was harboring all that cash and I was the victim of a home invasion by Cox Cable and SDG&E.

  • Report this Comment On February 17, 2014, at 7:24 AM, PEGformula wrote:

    Invest far on the correct side of fair value for this MASKED DEPRESSION of real GDP growth of NEGATIVE 10% upon proper accounting. PE ratios tend to 6-8 in bad times, not above 16! Stock prices are more than 2X overpriced. Going long is foolish but the Fed has been rewarding stupidity for way too long.

  • Report this Comment On February 17, 2014, at 7:26 AM, PEGformula wrote:

    Teachers are way overpaid and a great reason why this country is bankrupt. Go read the site with the real solutions: proposedsolutions. We could save $1 TRILLION per year by simply getting rid of 20% of the overpaid, under-worked, bad attitude government employees and paying the remainder at 15% below that of the private sector.

  • Report this Comment On February 17, 2014, at 7:32 AM, leckbug wrote:

    This professor, seems to be one of the few from Harvard, that has any sense. The bottom line,is that he feels the banks are ripping him off, and he is correct. All the more reason to not be the "Fool", when, reading the "Motley Fool". The "Fool", has been in Obama's corner since Day 1, so when they

    echo Obama's words and try to tell you that "everything is OK with the economy", they lose all credibility, at least in my book.

  • Report this Comment On February 17, 2014, at 7:36 AM, erini wrote:

    Motley, you are really a fool! Professor didn't pull his money from BoA because he was afraid of the risk, as you state. He pulled it in a protest against interest that is less then 1%. If everybody did this, banks would go to hell, they would have zero reserves. Hell is were they belong!!!

  • Report this Comment On February 17, 2014, at 9:37 AM, Tallen00001 wrote:

    FDIC is of no value. placed a claim with them and they denied it stating that they only pay if the bank is completely robbed of all its funds by an outside entity not by the bank itself. FDIC is an insurance that will never e used.

    Destroying the banks would not force the government to be honest. The banks are not the problem, government is. Pull your money out of the government. Then something would happen.

  • Report this Comment On February 17, 2014, at 10:28 AM, Damocles wrote:

    Solid remarks on worthless paper that is the US dollar. If I had a million, I would immediately park 80% in silver, as it can't go much lower.

    On a side note, the professor really has nothing to worry about as Barry'll and has been printing more money if any problem arises. Oops, that is precisely why the professor is pulling out - the "Barrification" of America. Too bad there is not a larger run on BCA and all of the "big banks".

  • Report this Comment On February 17, 2014, at 10:35 AM, Aquaman65 wrote:

    Everyone is missing the point as near as I can tell. If you read the fine print, the FDIC has 99 YEARS to pay you back. The professor is not missing the point the author is. There is only 5-6% hard currency floated to the market place, the rest is electronic. I'll tell you what. Go to your bank tomorrow (after the holiday) and request a withdrawal of $10,000 in cash if you have that much, and watch what happens. Wait until you see what questions you are asked and do not be surprised if they ask you come back later in the week.

  • Report this Comment On February 17, 2014, at 10:49 AM, ugo wrote:

    Buy survival seeds, ammo, and rare gold coins from Goldline. They recommend rare coins over bullion because the government would enforce the gold act and confiscate citizens gold, but rare coins are exempt. Don't be stupid like these libs here.

  • Report this Comment On February 17, 2014, at 11:12 AM, sanjosemike wrote:

    Of course the banks and investment houses that (fraudulently) sold defective mortgage back securities caused most of the financial collapse in 2008.

    But that collapse did not have to happen if borrowers on this useless paper exercised "personal responsibility." What I mean by this is that if they had been able to pay back their loans because they did NOT over-borrow, then there would have been no financial collapse.

    It is popular to blame banks and Government for everything. But there becomes a point when we must consider and accept our own behavior in generating these disasters.

    I don't care what credit card you use, but if you pay back the credit card bill before or by the time it is due, you pay no interest. I realize that some banks are considering changing those policies to allow them to collect interest even on paid-in-time accounts, but you have a choice NOT to use their cards.

    Banks are just a business. If you don't like one, you can shift to another. There is an advantage to spreading out your investments in different venues and types, but there are no guarantees.

    Even if you take your cash out and put it in your home safe deposit box, that too might be stolen, and if it becomes known, you may pay with your life during the process.

    My point: It's time to stop blaming everyone and everything else for lapses in your own personal responsibility.

  • Report this Comment On February 17, 2014, at 11:52 AM, Tritam wrote:

    If he would have put his 1 million in silver the last couple of years, he would have lost up to half a million, by now.

  • Report this Comment On February 17, 2014, at 11:54 AM, fventi20 wrote:

    Most people are clueless re. FDIC (including the author of this article and most commentating on this article.

    Here are the facts:

    1.)FDIC is not a US Government Institution, it is a Federal Agency (BIG DIFFERENCE).

    2.) FDIC insures up $250,000 per account title "NOT ACCOUNT". This is a very important consideration when structuring your accounts.

    3.) FDIC does have the money to "GUARANTEE YOUR DEPOSITS"!. FDIC has a small pool of money (a very small percentage of total bank deposits) to cover your bank deposits. They work much like regular insurance companies who use actuaries (who compute the % of how many banks are expected to fail) to calculate there risk and exposure. Which brings me to number four a very, very little known fact because people never ever read the FDIC brochure they receive when they deposit money in a bank. So your bank deposits are not matched dollar for dollar. Most people miss this important fact.

    4.) FDIC has 99 years to pay off "MAKE GOOD" on your deposits. Yes 99 YEARS it is in print. Which means if enough banks fail they can offer you a small % ( at a discount) say 20% of your total deposits. Or you can receive payments in installments over 99 years.

    5.) There is always a risk if there are enough bank runs you will get zilch, zero because they FDIC will not be able to cover your deposit.

  • Report this Comment On February 17, 2014, at 11:55 AM, Tritam wrote:

    I like UGO's comment, knows ahead of time that the government would confiscate gold but exempt rare coins?? WTF? How would they know where/who has gold? Go door to door searching every house top to bottom and confiscate all jewelry, gold, coins, computer boards, etc?

  • Report this Comment On February 17, 2014, at 11:56 AM, GregZD wrote:

    Your money is certainly not safe in Bank of America. In the first place they have have been caught many times over overtly stealing customers money, looting trust funds and unlawfully foreclosing in several differ scenarios. Secondly they have been insolvent for over a decade and the FED and OCC have kept them afloat and allowed the to fraudulently portray their debt ratio and exposure.

    I was forced into a Bank of America trust in a family estate dispute. My family had been trying to steal my assets and force me to place my money in a trust for years and had already succeeded in stealing a car and boat through title fraud and getting all my major contractors to drop me, right after duping me into an Option One juice loan that stripped my equity that was intended to essentially be a bridge loan, to cover the temporary shortfall in cash they incurred.

    At the same time Ameriquest mortgage forged a note to transfer my residence to Bank of America by immediately initiating foreclosure. The recorder of deeds prevented me from viewing property records and jumped across the room and scribbled out the computer generated chain of title and the police began to threaten, harass, falsely arrest me and forced me to leave town along with attacks and threats by my family.

    I wound up living in a van and my leg was broken to prevent me from reporting Ameriquest/Bank of America fraud to law enforcement, the media and lawyers.

    With a quarter million in my trust account AND several hundred thousand in equity Bank of America left me out in the street to die, then bounced a check to a hotel and set things up so the doctor would not properly set me leg due to "not getting paid" I wound up crippled and in the street. The police had taken our van on bogus unlicensed driver charges and threatened us not to report bank fraud any more to law enforcement or media and placed my under house arrest with no charges. I had been forced to give away all my late model vehicles and construction equipment I had paid cash for outside of a handful of items I paid cash for. Bank of America forced to disburse funds put me up in drug addict hotel in violent neighborhood.

    So if you want to have several hundred thousand or more stolen from you by Bank of America and have the police attack you to help Bank of America get away with it by all means do so, but realize it's not a business it's the Mafia on steroids and even the founders daughter Claire Giannini a member of the board of directors vehemently warned the public Bank of America was crooked as the day is long.

  • Report this Comment On February 17, 2014, at 11:58 AM, Tritam wrote:

    I like the request 10,000 withdraw comment 10,000 shouldn't be a problem for any bank. That would be like 5 people cashing their paycheck?

  • Report this Comment On February 17, 2014, at 12:20 PM, ceh4702 wrote:

    If you are not getting any interest from your bank, look for another bank or find some investments you do like. Also consider splitting up your money in several banks or investment options. Gold and silver coins are also good investment options. Coins often increase in value due to rarity, not just the rate for the actual mineral.

  • Report this Comment On February 17, 2014, at 12:28 PM, ceh4702 wrote:

    So what happens if the feds and the banks and the federal government goes into default? Then FDIC isn't worth squat.

  • Report this Comment On February 17, 2014, at 1:52 PM, Savvy wrote:

    Just because he is a professor does not mean that he knows.

    Remember the old saying, "Those who can do, those who cannot teach".

    He is just earning a paycheck.

  • Report this Comment On February 17, 2014, at 5:49 PM, theresa2001 wrote:

    psst.. to all of you who say that he may as well stuff his money in a mattress rather than go for .05% interest: .05% of one million dollars is fifty thousand. If you have fifty thousand dollars to throw away, you can use my trash can. I don't mind.

  • Report this Comment On February 17, 2014, at 6:16 PM, xspear wrote:

    last time I looked 5% of 1,000,000 was $50,000 ---

    .05% is something very different.....

  • Report this Comment On February 17, 2014, at 6:33 PM, breakBofAnow wrote:

    The problem I have with this guy is that he doesn't mind if you keep feeding the Criminal bank, I believe he has a conflict in interest. It's wrong to know what BofA and the rest of the big 5 are doing to people through millions of illrgal foreclosures.of which I am one. This guy, J. Jenkins needs a lesson in reality.

  • Report this Comment On February 17, 2014, at 7:46 PM, mightythor47 wrote:

    He had $1 million in cash? He must have just woken up from a 5 year coma.

  • Report this Comment On February 17, 2014, at 8:11 PM, Aldente wrote:

    everyone should read Matt Taibbi's article "The Vampire Squad Strikes Again"…in the new Rolling Stone.

  • Report this Comment On February 18, 2014, at 9:55 AM, vcmg wrote:

    The level of lunacy in this comment section is worthy of late night TV.

    Gatekeeper in particular is incorrect, yet writes like he knows which end is up. He doesn't.

    See the response by TMFHurricane to Gatekeeper's comments for accuracy.

    Many of the others are similarly ridiculous but I have neither the time nor the inclination to call all of them out. I am trying to be respectful, as required not only by the rules but by common decency but people should not be allowed to post outright inaccurate information.

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