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72 Hour Emergency Banking Kit

September 27, 2008

In California, we see a lot of billboards to remind people to create a 72 Hour kit in case a disaster strikes. The kit is supposed to contain enough food, water & supplies so that you and your family could survive for 72 hours and be self-sufficient.

Companies like Chevron heavily promote this to their employees. They give out a list of supplies that an employee can purchase over a six week period so that the cost of the kit can be spread out and not become a financial burden. This is a fantastic idea for Chevron for two very good reasons. One, it's a great idea to make sure every employee can survive as best they can with a disaster. The other reason is that employees are not liable to come to work if they have to get food for their children. By giving each employee the tools to create a disaster kit, they ensure their own operations will get back to normal as fast as possible.

In the US, we have had the benefit of a stable US banking system for more than 70 years, mostly due to the Glass-Steagall Act of 1933. But now we find ourselves facing the worst financial crisis since the Great Depression. Ironically, much of the problems came about due to the repealing of the Glass-Steagall Act in 1999, but thats another subject. Nobody really knows how bad the financial crisis could become, but it seems to me a smart person might look at what is happening in the financial markets, play it safe and consider creating a 72 Hour Emergency Banking Kit.

The idea is simple, could you survive if your bank closed for 72 hours and you were unable to withdraw money? What about a week? I mention this not to inspire fear, but to inspire personal responsibility. In the last few months we have seen IndyMac fail, Lehman Brothers fail, Washington Mutual fail. In most cases the failure was the classic "Run on the Bank" where customers withdrew so much money in a short period of time that the bank could not continue to function. In the case of WaMu, customers took out $16.7 Billion dollar in 10 days. WaMu and IndyMac may have been under shaky footing, but they would have survived if it wasn't for the panic caused when customers withdrew their deposits. Would your bank survive that scenario?

We as customers have been lucky because the blow resulting from those failures was softened by the FDIC, which insures deposits up to $100,000. But what if a bank failed that caused the FDIC to be short on funds? When WaMu was closed by the FDIC, the remainder was purchased by JP Morgan Chase. But if Chase did not step forward, the FDIC would have been short $30 Billion dollars to cover all of the deposits. Nobody knows what would happen if the FDIC declares a bank insolvent and didn't have enough funds to cover the bank deposits. Nor do I want to promote any fear about what would happen. It just seems to me that for the next year, it might be wise to look over your personal finances and take steps to ensure that if your bank were to close that you could still function. This is what I would call a 72 Hour Emergency Banking Kit.

I am not a financial planner and do not claim to have any insight on the market. These are just some steps I think might be prudent.

Check Your Banks Health: Visit a Web site like and investigate your banks overall financial health.

Open a Second Checking Account: Take the time to find a separate bank or credit union than the one you currently use. If your primary bank were to fail, having a second account would allow you to have an alternate place to make deposits. It can take 10 business days to open a new checking account, which is why I suggest opening one well in advance so you are seen as a stable customer instead of a risky new customer. You might find a bank you like better than the one you currently have.

Have Cash On hand: Have enough cash on-hand that you could use it to cover purchases in an emergency.

Keep Extra Supplies On-hand: If you have enough food and supplies to last for a week, it can dramatically lessen the impact you might face if your bank was closed. If you live in an area prone to disasters, this would be an excellent idea to have a disaster kit.

List Your Financial Resources: Have a list of all of your bank accounts, Certificates of Deposit, Direct Deposits, Regular Direct Withdraw Payments and other financial instruments. Having a list of your direct deposits and direct payments will help you if you need to move your deposits to another bank. Store these and other priority documents in a waterproof, fireproof portable container. Store a second set of records at an off-site location.

These are steps I have personally followed in recent weeks. I mention this to others because I don't see much talk in the media which seems strange. I hear all the time that in the next 30 years, there is a 70% chance of a major earthquake striking near where I live, but it's not a guarantee. This is why I have an emergency earthquake kit.

All of my food and supplies will be useless in a few years unless I remove it from my kit, use it and replace it. So its a bit of a financial burden to have all of these supplies I may never need. But if I need it, I am going to be rather relieved I took the time to make sure I was safe.

This is why I am suggesting people investigate the idea of a 72 Hour Emergency Banking Kit. You may never use it, but it seems that if you need it, you'll thank yourself for having the insight to be prepared in the first place.

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