Harvard Economist Fears Bank Collapse: Pulls $1 Million Savings out of BofA

With fears of yet another government default only 30 days away, Terry Burnham, former Harvard economics professor and longtime critic of the Federal Reserve, is pulling all of his money out of Bank of America, and warns others might want to consider doing the same.

Although he stops short of calling for a run on the bank, he admits that what he’s doing could cause a huge ripple effect, causing other depositors to follow his lead. But he says the chance of losing his money by keeping it in the bank has become to great, and says he had no choice but to abandon Bank of America and the banking system.

In an article for PBS entitled Is your money safe at the bank? An economist says ‘no’ and withdraws his, Burnham writes, “Banks today promise everyone that they can have their money back instantaneously, but the bank does not actually have enough money to pay everyone at once because they have lent most of it out to other people — 90 percent or more.”

Why he’s warning Bank of America Customers:

He Writes:
In recent days, the chances for trouble at Bank of America have become more salient because of woes in the emerging markets, particularly Argentina, Turkey, Russia and China. The emerging market fears caused the Dow Jones Industrial Average to lose more than 500 points over the last week.

Returning to my money now entrusted to Bank of America, market turmoil reminded me that this particular trustee is simply not safe. Or not safe enough, given the fact that safety is the reason I put the money there at all. The market turmoil could threaten “BofA” with bankruptcy today as it did in 2008, and as banks have experienced again and again over time.

He then addresses critics who say the Federal Government’s FDIC insurance program protects depositor’s money by insuring it will be repaid should a bank go under. He says in the PBS article, “The FDIC currently has far less money in its fund than it has insured deposits: as of Sept. 1, about $41 billion in reserve against $6 trillion in insured deposits. (There are over $9 trillion on deposit at U.S. banks, by the way, so more than $3 trillion in deposits is completely uninsured.)”

In my opinion, he’s dead right on that. Should we face a crisis like we saw in 2008, when many of so-called “to big to fail” banks almost failed, there’s simply no way the government can possibly repay depositors. With our  government already $17 trillion in debt, does anyone really believe they have the money to repay $6 trillion in insured deposits?

Where can you keep your money?

Burnham advises a number of things that I think are very smart; particularly paying down debt, keeping emergency cash on hand, and finding smaller local banks to spread your money around. In addition, I suggest stocking up on emergency supplies, food, water and consumables that will hold their value over the long run. Things like guns and ammo will definitely hold their value; and are not only a smart survival investment, but might be a smart financial investment as well.

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  1. To begin with; the correct usage of as small a word as “to great” when in fact it should be TOO great, takes away from the writers ability to show that he knows what he/she is talking about.I doon’t like the way our country is running into the groun. I do not like or trust BofA with my money , nor Chase bank. But come on ,REALLY? I’m to believe that a writer who is evidently NOT capable of writing and knowing the difference between “too great” and *”to great a risk”!!?? All this actually pointed out to me was AGAIN, our failing system of education in our country.

    • Rebecca Reidy: Why should anyone listen to you when your grammar and spelling reflect your ability to understand and or express a thought or idea?
      Just applying your same theology to what you wrote.
      To begin with; the correct usage of as small a word as “to great” when in fact it should be TOO great, takes away from the writers ability to show that he knows what he/she is talking (about.I doon’t) like the way our country is running into the (groun). I do not like or trust (BofA) with my (money ,) nor Chase bank. But come (on ,REALLY?) I’m to believe that a writer who is evidently NOT capable of writing and knowing the difference between “too great” and *”to great a risk”!!?? All this actually pointed out to me was AGAIN, our failing system of education in our country.)

      • I am willing to believe if the available photo block had your picture in it, it would look like the one teacher in school no one liked.

        • HERE! HERE! I just don’t get some people!! They pick at a splinter in someone else’s eye and most times than not have a TREE IN THEIR OWN!! And think of it all your trying to do is offer some help!!?? Well I for one thank you for the insight. I can’t wait to hear about something I wrote wrong. LOL

          • This is funny and reminds of what I saw on FOX News just the other day. A few protesters had gone to one CEO’s house (CEO of some petro chemical plant) at 10 o’clock at night to protest against his company arresting a few women who had done damage to the company’s property. They let him know that he was ruining our future and their children’s future by producing the crap that his company produces…then they all drove away in cars!!!!!

      • I thoroughly enjoyed your example of how their post should have looked. I find it to be ridiculous for someone that could only find ONE usage error, (that wouldn’t be caught by spellchecker) give a response that was laden with spelling and grammatical errors. You shouldn’t be ridiculed for correcting him, you should be applauded. We are fostering a generation of illiterate kids that want to shorten every word because it’s easier to text, and then that translates over to he papers they write in school. People don’t realize that these are the ones that are going to be LEADING OUR COUNTRY ONE DAY. Education, and spelling and grammar falls under education, has to become more important than sports. Otherwise we will surely fail. Wow. I didn’t intend to go on for this long. Oh well.

    • So Rebecca, instead of discussing the merits of the article you detract focus by playing grammar police instead? Do you even pay attention to what is really happening with the economy and the financial world, or are you more concerned with others use of the English language? 4 international bankers have committed suicide in a period of a week. You should be wondering why instead of worrying about the word to vs too. There are people out there who are awake and paying attention to what is happening in the real world. Will you join us?

      • 4 suicides in a week from bankers??? or is it something more evil going on???

        and for the puncuation police sorry about the extra question marks.

    • Rebecca, As a professor of remedial writing at a local college, I would never give an A to a paper that has two exclamation points and two question marks in a row. The rule is only one at any one time, and never are the two end marks placed together. Since they are both end marks, you need to choose which one fits the best and use it.

      • Sussex Girl, Rebecca’s writing is indicative of a low IQ, but I’m not impressed with yours, either. I think it illogical to refer to ‘giving an “A” to a paper’. One gives an “A” to a person, not a paper. Secondly, such rules as the one you mentioned are purely arbitrary. There is nothing inherently wrong with or illogical about using two exclamation marks followed by two question marks. Some of the smartest, most influential people are those who understand arbitrary rules and deliberately break them for good reason. For example, I broke an arbitrary rule in this reply. I put a period outside of quotation marks when the rule is that I should have put it within. However, I broke the rule deliberately because I’ve determined that it makes more sense and is more logical to do it the way I did it.

        Consider another mistake you made. You referred to choosing “which one fits the best”. Since you were comparing only two end marks, you should have used the comparative case – not the superlative; you should have used “better” – not “best”.

    • Your lack of understanding of grammar also makes your point moot. Too many grammatical errors that will drive even an 8th grader nuts.

    • Rebecca, do a search on FDIC-BOE. FDIC is overridden by this law(2011)which states that unsecured creditors, previous depositors, funds will be taken were the government doesn’t have to bail the banks out again. Easy way for the banks to steal your money.

  2. To edit my own writing I would like to submit the following corrections.(I have an 8th grade education):*don’t *ground

    • You’ve got to love the irony of someone complaining about grammar mistakes and then butchering the English language in the process.

      And you really have to love this persons attempt to bash a solid article because of a grammar mistake. Looks like everything in the article is pretty damn solid and the advice this site gives is rock solid and helps a lot of people. So maybe next time you should thank them for helping people instead of trying to push your agenda, because I believe people like you troll the Internet looking for anyway they can to stop the truth. Probably another Obama truth squader, this is one of their tactics.

  3. Still, this is better written than any actual news article I’ve ever read lol! More information and I bet…..more truth. Anyway, this is scary, the saline shortage and debt problems…. not sure what to do besides safeguard my money.

  4. Crash in March, gov. Is stock piling saline, and Europe is angileing at consolidation. Asia is on death watch. Money in or out of bank won’t be worth anything soon. Buy guns, ammo, and seeds……

  5. Good article rob. This is why we are doomed instead of just paying attention to the info we are content to argue amongst ourselves about grammar. I am sure they will dot the eyes and cross there T’s when they fill out our in processing paperwork at the internment camp.

  6. I think the real intent of the article is to inform people. You cannot stockpile grammar and it will not help you out in a crisis. In a crisis the last thing you will think about is sentence structure.

  7. I understand the intent of the article, but it is supposed to be written by a Harvard Graduate. Kinda like the Nigerian Prince that needs my account number. I’m a millionaire according to the email, so I’m not worried. Grammar Nazi’s……GO!

      • “Terry Burnham, former Harvard economics professor” Oh okay, my mistake, he wasn’t a graduate, he TAUGHT at Harvard. Thanks for pointing that out. IMHO, that’s worse.

  8. Thanks to all of you who responded, after a long day it’s nice to come home and read such entertaining posts. It’s always good for a chuckle.
    Bottom line, there seems to be a lot of professional money figures that have made comments about our unstable US economy. Take it for what its worth, or don’t. Think I would listen to the guy who has a 1,000,000 to actually withdrawal. Even Warren Buffet has put the money alerts out. Concerning when you make a 137 million a day in 2013 and are worried about the current US economic state.

  9. After reading all the above posts, it seems that some people on this page are far far left kool-aid drinkers. The point is that something strange is happening around te world that has to do with global economics,for many years we the preppers have known about the one world govt.,the end of times or whatever, but it is apparent that something is going on around the world,as to change the way that things have been for years.

  10. I guess I’ll chime in with a brief comment on grammar. It seems like many others are sensitive to this problem as well!

    I’m certainly no grammatical expert, but it IS something that has always annoyed me as well. I do not like it when people make a lot of thoughtless errors when they right. But one misspelling is something that could happen with anyone, even an expert on grammar. People DO seem to always be in too much of a hurry when they write, text or e-mail. They should take the necessary time to proof read their writing before clicking on submit/send. It only takes a short time. It’s not like proof reading an entire book. If more people did this, we wouldn’t need to spend so much time trying to figure out what someone was trying to say.

    • “I do not like it when people make a lot of thoughtless errors when they right.”


      Sorry, I’ve been snowed in too long!

  11. What a bunch of tits you Americans are. Only you lot can manage to turn a debate about finances into a grammar competition. No bloody wonder your economy is falling apart when judging the mentality of you lot. Do you even know what is happening in the world, I mean, really? And I am not talking about Texas, bunch of “federal puppets”.

  12. Un believeable, it is obvious that the people that have caused this worlds problems, has all of you right where they want you. Dividing us apart, making one against the other. I always thought that Americans came together when though times came. I don’t see us coming together as Americans anymore. What the f___!!…

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