A Tennis Titan's Banking Blunder

Drew Thomas  0:12  
All right, so we are back. Back, still here, I don't know. It depends on how you look at it, with another episode of Bank Chats, 2 Cents, with Jeff Matevish.

Jeff Matevish  0:21  
Hey Drew.

Drew Thomas  0:22  
And myself, of course, and just the two of us today. As is typical with Bank Chats 2 Cents, right? Yep. Yep. So, you found an article, I'm going to let you explain the article. Okay. And then we're going to talk about the article. I'm going to make some jokes, just say, because this article is a little bit ridiculous on the surface level, but I think there's stuff in there that is worth going through. Sure. Yeah. So, so tell us about the article, and then we'll, and then we'll kind of go from there.

Jeff Matevish  0:48  
Okay, so, I was just perusing the internet for financial news, and...

Drew Thomas  0:53  
As you do.

Jeff Matevish  0:53  
As you do, yeah. And so there was an episode, a YouTube episode of Hot Ones that came out. Oh, yeah. Yeah, they, they, it's kind of like this, but with, with chicken wings and celebrities.

Drew Thomas  1:06  
So, better.

Jeff Matevish  1:07  
A little bit. It's better a little bit. But they had Serena Williams on, and one of the, the topics they had talked about, or that they had briefly mentioned was that at one point, she had a million-dollar check that she had, had, had won from one of her matches, and she tried to deposit it through the drive thru of her bank. Gotcha. And they had told her, you'd better come in for this one. So, she learned a valuable lesson, I guess this was years ago. But um, yeah, if you have a large check, it's not as easy as, you know, going up to your depository ATM and popping it in there and depositing your check. You know, there's a little bit more involved.

Drew Thomas  1:46  
Yeah, yeah. So, what? So, did they take her check? How does the story end? Like does she take...

Drew and Jeff  1:50  
I mean, that, that's where the story ends. Oh, that's what I mean. Yeah, that was it. So, it had to do with banking. Yeah.

Drew Thomas  1:57  
Yeah. So, when you told me this, my first reaction was, how awful for Serena Williams that she's driving around with a million dollar check in her car and just forgotten it existed.

Jeff Matevish  2:07  
Yeah, that's a great problem to have.

Drew Thomas  2:09  
I mean, seriously. Yeah. But then, and then on a whim, we're like, oh, well, since I'm driving by, I'll just go ahead and pop through the drive through and deposit my million-dollar check, like it's nothing, like it's no big deal. I wish I had these problems. Yes. Like this. Yeah, this is, you know, I mean, don't get me wrong, the woman is a fantastic player and a fantastic athlete, and she deserves everything that she has. But then, I would, I would love to be so well off that I could forget that I had a million-dollar check, that I hadn't yet deposited. So, okay so, so all things, you know, I'm done, I'm done ragging on Serena Williams now, because I am nobody, she can crush me like a bug. But it does bring up some good points in terms of, for those of us that will never have a million-dollar check, right, it still applies. There are some things that we can talk about and dissect this a little bit and talk about why banks do what they do when it comes to checks and deposits and things like that. So, I guess the question is, first of all, I guess based on the story, the question is, why wouldn't they take the check through the drive thru?

Jeff Matevish  3:12  
So, normally, you know, if it's a transaction that's outside of your norm, you know, they may question it. But who knows, that could be, you know, a legitimate transaction for her, you know.

Drew Thomas  3:22  
Could be. Yeah, it could be pretty typical for her theoretically, right. But you're right, the first thing that most banks are going to want to do is know their customer. So, if you know that, hey, this person, whoever it is, is typically depositing large value checks, and they have an account with you that they've had in long standing and it's in good shape, and it has a relatively equal amount of money in there. This might not have been a big deal, right? Right. But it's still a million dollars. I mean, this is a big check. And so, the bank has to protect themselves as well, because in reality, you don't know. I mean, you assume that somebody like Serena Williams is not trying to conduct fraud, but you don't you don't know where she got that check. You know, you may know her, but you don't know where she got the check. She might have played a charity event and they wrote her a novelty check for all you know, right? I mean, it has nothing to do with her, right. So, the bank has to be protective of not only themselves, but also the customer, right. Because ultimately the customer is responsible, they made the deposit, they're responsible for that. If that check bounces, the bank has to try to recover that money somehow, and the first thing they're going to do is try to recover it from the customer that gave them the bum check. Yeah. So, these laws, or regulations I should say, exist not only to protect the bank but also to protect the customer. Right? So, probably one of the first things that they did when they asked her to come inside was they probably looked at that and they probably looked at her accounts and did all their due diligence to make sure that everything seemed on the up and up. That would be my, that would be my guest, I mean I'm, we're making assumptions here based on a very small story on a very much better podcast. Anyway, so, but my guess is then after that they probably put a hold on the check. So, so have you ever had a hold put on a check?

Jeff Matevish  5:07  
I don't think I've ever tried to deposit a check large enough that would require a hold.

Drew Thomas  5:12  
Fair enough.

Jeff Matevish  5:12  
I know what, I have an idea what they are. Okay, they're gonna hold the check to make sure that those funds are available.

Drew Thomas  5:17  
Yeah, I mean, like, honestly, before I got into banking, I had no idea that they would ever hold checks. I just assumed that when you took a check to the bank, they just deposited it into your account, and you went on your way. Yeah. But there are people that for whatever reason, whether it's, um, they get an inheritance, or they get an insurance payout. Maybe it's that they got a, I don't know, some sort of a windfall, whatever it is, they won the lottery, they got a big bonus at work for whatever it is, if somebody brings a check into the bank and says, well I want to deposit this, and it's outside the norm of their normal deposit behavior, chances are the bank's gonna say, well, we need to put a deposit hold on this, right. And that can make people irritated sometimes, because it makes you feel sometimes like you're doing something wrong. Yeah. Yeah, I see that. Yeah. And I don't think that that's true. Like, in most cases, people aren't doing anything wrong. They're just legitimately trying to deposit something that they feel is true. But in some cases, you know, that check, you know, the bank wants to make sure that the funds are actually available, the check doesn't bounce. So, they can put a hold on it. Now normally, according to Regulation CC, okay, most banks, what they'll do is they have to provide you with $200 of that deposit the next business day. And then traditionally, the remaining amount of the deposit, whatever it is, by the second business day.

Jeff Matevish  6:33  
Okay, well, why $200?

Drew Thomas  6:34  
I mean, I don't know, okay, that the regulation says $200 bucks, I'm, you know, that that's what it is. Probably because the regulation was written at a time when $200 was a lot more money.

Jeff Matevish  6:44  
Okay, okay, that makes sense.

Drew Thomas  6:45  
Yeah, that's my guess. Okay. But that's the, that's what the rule says. So, the regulation says $200 the next business day, the rest of it the second business day, okay. Unless there are extenuating circumstances. So, I went back, and I tried to get some, some information for you on what those extenuating circumstances might be, like, why would a bank put a longer hold on a check? So, traditionally, most banks, they're not gonna be able to do more than about seven business days, which is essentially a week. And have we ever talked about business days?

Jeff Matevish  7:14  
No, no we haven't.

Drew Thomas  7:16  
Explained this.

Jeff Matevish  7:17  
My understanding. So, a bank can deposit money up to a certain time of the day. Anything after that time, whether it's during the business hours is considered to be on the next business day, correct?

Drew Thomas  7:31  
Yeah. Now, a lot of banks are now going to same day. Okay. Right. So, that so I mean, rules have changed a little bit based on like, whenever I first gotten into banking [inaudible] years ago. Yeah. But essentially, yes, so a business day is going to be a day when the bank is normally open for business. Right. So, that's going to be a Monday through Friday, traditionally. If it's a holiday, like a Memorial Day, or Labor Day that falls on a Monday, that is not a business day. Saturdays, even though some branches are open on Saturdays for most banks, that is not considered a business day. Right? So, a business day is a Monday through Friday, normal working hours, that sort of thing. So, what people don't always get is that the next business day for a deposit might be if I deposit something, say through mobile banking, at 10 o'clock at night, on a Friday, well, most banks are already closed for the day. So, they're on Mondays business, which means your deposit may not show up until Tuesday. So, even though you're depositing at 10pm, Friday, your money may not show up in your account until Tuesday morning. And yet that's still considered one business day, right. And then you see, when you start adding holidays and things like that into the mix, sometimes it can be four or five days before, even though the bank considers that one business day it can be it might be multiple days, if it goes over a weekend or something like that it can be calendar days, have significantly more than, than business days. So, anyway, I'm just amazing everybody with my limited knowledge of banking. So, back to the holds. So, you could theoretically put a hold on the check for up to about seven business days. Right. And normally, those reasons are going to be for things like, you could be a new customer, right? That could be the first thing. If we don't know you, because I said even with Serena Williams, like, you know, if they knew her, they knew that she was an existing customer, longtime customer of the bank, they know her history, they know her relationship, that goes a long way toward making the decision on whether or not you have to hold a check, right. But if you're brand new to the bank, and you don't, and the bank doesn't know you, has no idea what your history is, then they may place a hold on the check because they simply don't know you. They don't have any history to go off of, right. Another one would be a large deposit. So, checks worth more than, say $5,000, those in excess of the current value of your account, are more likely to be held.

Jeff Matevish  9:52  
So, so if you can't, if you can't back it if, if that check bounces or yeah, they'll put a hold on it.

Drew Thomas  9:57  
Yeah, yeah, I mean, really, I mean, so, you know, in the case of Serena Williams, chances are she had more than a million dollars in her account, it would be my guess. Yeah. Unless her accountant is just absolutely awful. But she might have accounts in multiple banks as well.

Jeff Matevish  10:11  
Yeah, you know, because that's not necessarily insured by the FDIC.

Drew Thomas  10:15  
Oh, yeah, we can talk about that. Yeah, that's good, very excellent point, Jeff. Frequent overdrafts. So, if an account has a repeated history of overdrafts, banks may be more likely to place a hold on the check to make sure they clear before releasing the funds. I mean, I hate to say it, but there are people that run really close to the bone when it comes to their accounts. And if they are traditionally, habitually overdrawing their account, the bank is less likely to just grant you that deposit in the hopes that they get the money in time for your account to be considered good, that you're in good standing. And then also checks previously returned unpaid. So, if you're trying to deposit a check that was returned unpaid once or multiple times before, there's a stronger chance your bank will want to validate the check before making the funds available. It can also even depend on who the check is being drawn on. If it's being drawn on the same bank as yours, the bank might be able to look at that other account and make sure the funds are actually available. You know, because they're the same customer, they're going to tell you that. Right. Right. I mean, they look into it, they could look at it and see, okay, well, are there funds available in this, in this account or not? Sure. Even that's a little iffy, though. Because if somebody has written 12 checks in the same amount, and the account might look like there's funds available, but maybe they really aren't, because there's 12 checks out there, depends on which order they come in. Yeah. But again, if the, you know, if the check is from a bank halfway across the country, they may not have any clue as to whether or not that check is good. Okay. There's also things to consider, like, is it a, is it a personal check? Or is it coming from an insurance company? Is it a, is it a treasurer's check, or cashier's check that is basically, guaranteed funds? Do you know why that's called guarantee funds? No. So, treasurer's check, or cashier's check is considered guaranteed funds, I'm air quoting. For those of you who can't see the fact that I'm air quoting.

Jeff Matevish  12:05  
Oh, because that's written by the bank. That's, that's a guaranteed check.

Drew Thomas  12:09  
Right from the bank, because it has to be paid for with cash, okay. So, you can't write a check for a cashier's check, you can't use a credit card for a cashier's check. It has to be funds available in your account, essentially cash, that you then get the check from the bank for, so. So, that kind of a check might be a little more prone to not getting a hold as opposed to something else. But even those can still be held. I mean, the bank, it's the bank's prerogative, essentially, to look at all these different things and make sure it's not fraud. You know, we talked about money laundering and things like that, you know, there are people that will pass a check from person to person to person in an effort to try to make that money look good. Or look legitimate, even though it isn't. So, you got to be aware of that stuff.

Jeff Matevish  12:51  
So, now, we've been kind of talking about, we're assuming we're talking about kind of personal checking accounts. Is there any difference between business to business or?

Drew and Jeff  13:00  
Not real I really, they can put a hold on? Sure. Okay. Yeah.

Drew Thomas  13:03  
Yeah, they absolutely can. Again, maybe not at that value, because businesses oftentimes deal with much larger dollar values, but it's possible. Sure, they could there they wanted to. So, yeah, so it's understanding the, it's understanding the regulation and like, your, your bank cannot just unilaterally say, well, you know, we're gonna hold this check for a month. Like that's why Reg[ulation] CC is in place. It says, it gives you a guideline to say how long a bank can realistically hold a deposit before they give you access to that money. And that was put in place because there was a time way, way back. And you know what we should do? We should do, I'm digressing again. We should do a 2 Cents or a podcast about like some of the history of banking, because some of the stuff, these regulations came about because of things that happen. Yeah. And we could, we can maybe talk about that at some point too. That might be an interesting topic. But anyway, there was a time whenever the banks could really hold your check for as long as they wanted to. And that presented all kinds of problems, you know, for people, where they were getting paychecks, but they weren't getting, their checks for bouncing, bills weren't getting paid because the bank was just lollygagging around not doing their job, not depositing the checks and things.

Jeff Matevish  14:15  
So, it probably played into the you know, people were not trusting the banks back then. And like we talked about, you know, they're not, people aren't putting their money in the banks. Yeah.

Drew Thomas  14:23  
Yeah. Like back in the 20s. And 30s. Yeah, during the Great Depression and stuff. Sure. I mean, so yeah, so that's why some of these regs exist. And so, it's fine. It's walking that fine line between protecting the bank protecting the customer, but also doing right by the customer who's, you know, 99 out of 100 people are just trying to go about legitimate business. And you have to recognize that but that doesn't mean that you ignore the fact that there could be the 1 out of 100 chance that there's fraud or something else happening. You got to be aware of that. You know so, especially in today's world, my gosh, we've had so many conversations about cybersecurity, things like that. But yeah, so anyway, getting back, you also brought up a good point about the FDIC. So, why is, so why else would this be an issue with this million-dollar check with Serena?

Jeff Matevish  15:05  
So, you know, when she puts his money in her bank, a million dollars is not fully insured by the FDIC, only $250,000 are insured for her, for her, right, right, per financial institution. So, she may be better off separating that into several different financial institutions.

Drew Thomas  15:24  
Or, or there's, there's also different ownership categories she can look into. Right. So, if she wanted to open a joint account with me say, right, okay. Okay. Well, and then put that money in there, well, now we are jointly insured for $500,000, still only half. I get $250,000, she gets $250,000, right. So, there's that option as well. She's not going to open one with me. Maybe she'd open one with you? I don't think so. We'd both have some explaining to do at home if we opened an account with Serena Williams.

Jeff Matevish  15:54  
Not too much explaining. I think they'd get over it for half a million dollars. But yeah.

Drew Thomas  15:58  
Probably, yeah. So, that, so that is an option, too. But yeah, I mean, you want to also diversify. And there are honestly, probably better vehicles to have a million dollars in other than a checking account to be perfectly fair. Whether it's a CD, or some sort of traditional savings vehicle like that. But also, you know, that gets into talking about, you know, trust and personal trust and investments and things like that, too, that have nothing to do with FDIC insurance. But in reality, is probably, if you have a trusted financial adviser, probably a better place for your million dollars to live. Yeah. Then your checking account. Yeah. But that's a whole different ball of wax that is not FDIC insured. Right. So, yeah, I mean, I think it's, you know, again, we've kind of been making a little bit of a poking a little bit fun at this, but I think it's a good way to look at some of this stuff and understand even on our level, who, for those of us not getting million dollar checks, why some of these things happen.

Jeff Matevish  16:55  
Yeah, like, you know, if, if I won the lottery tomorrow, and I won $5 million, what would I do? Yeah, I mean, you know, what's the process of doing this legally, you know, putting your money, your winnings into your bank? And right, you know, what the steps are.

Drew Thomas  17:10  
I'm very happy that you didn't immediately say, after I tendered my resignation, what are the very first things that I do?

Jeff Matevish  17:17  
I'm one of those guys that says, you know, if I want a million dollars, you know, I'd still work, you know.

Drew Thomas  17:22  
You know what, I mean, sadly, today, a million dollars is not what it once was. No, no. That's not to say that I'll ever have a million dollars. But comparatively speaking, a million dollars does not necessarily buy you out of having to ever work again. I mean, I mean, think about it this way, and again, every area is different, every part of the country is different. So, but on average in the United States, an average house is like a half a million dollars now. Yeah. Like the average home price, the median home price, I'm sorry, I'm sorry, the median home price across the United States is like $400,000. So, a million dollars does not buy you everything it used to, even cars. I mean it's crazy what cars cost, my gosh, yeah. I mean...

Jeff Matevish  18:02  
I'd love to get a new car, but I couldn't afford the payments on it.

Drew Thomas  18:06  
No, I mean, and some of these cars, I mean, and you don't even have to buy a Maserati or an Escalade or something like that, for some of these cars to be more than what my parents paid for their house back in the 80s. I mean, it's just, you know, and even accounting for inflation, it's not, it's not as far different as you might think. Yeah. So, yeah, so all right. Well, I think this was good. What else do you got anything?

Jeff Matevish  18:29  
Let me check my notes. Nope.

Drew Thomas  18:33  
Right. Off we go then. Thanks, Jeff.

Jeff Matevish  18:37  
All right, thanks, Drew.

Drew Thomas  18:46  
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Drew Thomas  19:53  
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