Jun 10th 2011
Never in my life have so many banks not wanted my money.
About a month ago, I had agreed to become treasurer for a nonprofit organization. My first task was to open a new set of bank accounts. Why the old accounts were closed was anyone’s guess.
Through my work with tax-exempt organizations, I knew I would need a few items. A requisite would be the organization’s EIN, which in this case was the parent’s EIN. The nonprofit was covered under a group exemption.
I visited the first bank, an institution which I had not used before but wanted to try out. I brought a copy of the last tax return, a copy of assurance from the state agency where the parent is located saying the parent was in good standing, and a copy of the by-laws.
The personal banker said I would need more information such as the IRS determination letter and the original articles of incorporation. After two calls to the parent’s office in another state, I received the determination letter – issued in the 1960s – and the articles of incorporation from the 1940s with an updated assurance letter from the state agency.
The banker said she could not help because the organization was not registered in Ohio.
She would, however, have no problem opening a personal account. Why? The transfer checks were made out to me instead of the organization. I said I was doing the responsible thing and not running off to a country where extradition was difficult! The banker said she was sorry but could not do anything more for me.
The scenario was repeated at a second bank but changed slightly at a third, which was my personal bank. The personal banker at No. 3 said she would like to work with me but would have to check with the compliance department and that would take at least three business days. I explained that I used to work in banking and had a full understanding of how compliance worked. She said the rules have changed in the last couple of years, especially with the PATRIOT Act.
The next week, I decided to go to the bank where the accounts used to be held, or so I thought (the cashier’s checks were drawn from there). This time I worked with a business banker. He looked up the name of the organization but found no evidence of an account being closed (leads me to wonder about the previous account) but found one using the parent EIN had recently been opened.
The business banker had an understanding of a group exemption but wanted to check with compliance to make sure. He made a call while I waited. “No problem,” he said. “Do you have any funds to deposit?” I didn’t have any cash, just the two checks. “I can’t take the checks,” he said, “as they are made out to you.”
The business banker said I should deposit the extradition checks in my personal account, wait for them to clear (one business day) and deposit the total into the nonprofit account by writing a personal check.
My bank took the checks, no questions asked. The next day, the new bank took my personal check for deposit, no questions asked.
With the account FINALLY open and the deposit FINALLY made, I called the business banker to ask what I need to do about online access. “Not a problem,” he said. “You will receive instructions by email, items through the regular mail and you will be good to go. We just need to set an appointment for next week to provide you training and activate the account.”
All of this just to open a simple bank account. I expect obtaining a mortgage would be much easier.