The FDIC actually increased the amount of cash banks had to keep on reserve, because bankruptcy is a much greater threat than robbery. Thieves can only move so much cash around anyway. Though it’s worth noting that nearly all banks were covered by state deposit insurance programs of one sort or another before the FDIC.
I’m not aware of a legal requirement for physical cash. Banking regulation does establish requirements for liquid assets that banks must hold in order to be able to meet payment obligations as they fall due (e.g. from customer withdrawals), and such requirements are often said to require a certain level of “cash”; but they are met with highly liquid assets such as central bank money (deposits with the Federal Reserve) or securities that can easily be sold for central bank money (e.g. Treasury bills), not physical cash in the sense of banknotes.
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In the brief period where I worked for a bank, I found it remarkable how much bank business involves creating paper trails on risk identification and mitigation. Often the mitigations were way out of proportion to the actual risk (either too much, or too little). Or other odd situations involved documenting that we were meeting or exceeding “industry-standard” practices. The only important thing is that the paper trail ultimately supports the overall financial risk model.
So you might have a big vault door because qualifying for a certain insurance policy required them to do a convincing mitigation of a combined earthquake, civil unrest, and a determined actor with a very large truck. If the value calculation says that the potential loss is much larger than a big honking door, then you get the big honking door. Or if you’re qualifying for an investment with a large list of criteria to be met, and one of them is “big honking door”, and that’s minimal compared to the value of the deal, then again, “big honking door”.
If you went through the paper trail you’d probably eventually find what’s at the bottom of the requirement. There might be some sound reasoning, or it might be “this deal is 10% bigger than the last deal we did, so we’re making the door 10% bigger to satisfy risk management.”
This certainly sounds definitive. You’ve convinced me.
The problem is - in The Goode Olde Days, far more was done with cash than credit. It was normal for the big factory down the street to send a pair of hefty guys (or armoured truck) to pick up a huge wad of cash which was dispensed to each worker on Friday at the cash window of the accounting department. (AKA “The Eagle shits on Friday”)
This reliance on cash implies the banks needed lquidity on hand in the sense of green rectangles of paper and silver coins, not computer bits. Also it explains why bank robbery was such a lucrative business in those days. Even if the liquid cash was 10% of the deposits, the rest loaned out, the risk was a subsequent run on the bank - at which point bankruptcy was a real risk.
A bank that got robbed, had no liquid assets left, simply closed it’s doors for a few days to sort things out - as usually happened during a run on the bank. Needless to say, that didn’t inspire confidence. If at the end of that closure, a few days later, they could not somehow make the books balance - they went belly up and the slower depositors were “screwered”.
Maybe in bankruptcy, with their loans sold to other banks, people would get a decent amount of their money back… eventually. So you can see why private insurance was an attractive thing as bank robbers got bolder. Then of course, it’s also Henry Ford’s fault. People like Bonnie and Clyde could meander across the landscape so fast that the law could lose track of them, whereas a gang on horseback in Western times was more trackable.
BTW - I worked once at a place where the vault was 3 stories tall, with foot-thick doors on each floor - the ground floor was the mainframe tape library, the second floor was accounting records (by then, reams of computer print-out) and the top floor was the engineering drawing vault, with some paper drafting going back 50 or more years. It wasn’t so much to avoid burglaries, as it was also decently fireproof - since those records would be an essential part of the business.
A short history of US Banking
1791: First Bank of the United States, which could have evolved into something like a Central Bank, established. Alexander Hamilton pushed for it.
1804: Alexander Hamilton killed in duel.
1816-1836: Second Bank of the United States replaces First Bank
Panic of 1819
1836: SDMB villian Andrew Jackson vetoes the recharter of the Second Bank of the United States. Free Banking reigns.
Panic of 1837
Panic of 1857
Panic of 1873
Panic of 1884
Panic of 1890
Panic of 1893
Panic of 1896
Panic of 1901
Panic of 1907
1913: Federal Reserve established. Now banks have a lender of last resort and the beginning of tighter federal regulation.
1930-1933: Massive bank runs during the Great Depression
1934: Newly established FDIC extends deposit insurance to the US.
So there were only about 30 years of Federal Reserve regulation before the FDIC was established. Before that was the free banking era, when banks routinely issued their own currency. Good times.
When I was posted there the vault was used as an exercise room for the troops stationed in the communications centre, with the 10’ gap between the vault walls and the surrounding bunker walls providing an indoor jogging track. The door was secured in the open position, and was impressively thick.
Don’t forget that another purpose of a bank vault is to protect the contents from fire. I wouldn’t be surprised if bank fires were more common than robberies. A thick door might be useful for this purpose.
Are these vault walls/doors really as massive as they appear? Are they actually solid, or just meant to look that way?
The door (or plug or whatever it should be called) in the OP seems to be 3-4 feet thick. Thats a LOT of steel. I am no machinest, but I would think there would be significant manufacturing challenges when creating such a solid chunk of metal.
At first I thought the hinge system seemed light but then I realized there was a entire great frame bigger than the door that perhaps would be strong enough to support such a massive load.
Now I want to do a Heist Movie set in the late 60s, during a panic about a possible Nuclear attack. Canada has moved all its gold into the bunker vault. A team of disgruntled guards decide this is a great opportunity to steal a bunch of it. “Dude, we run 50 laps around that vault every damn day! We know it like the back of our hands! By the time they know they’ve ben hit, we can be as far away as Renfrew!”
Have one guy who can mess with the bunker’s systems, so those in the bunker think the nukes have really gone off, so they won’t try to chase the thieves once they make their escape.
I’m no engineer but that hinge looks pretty substantial to me.
The door certainly is not solid. It has the locking mechanism inside it. That said, I have no idea how thick the cladding is.
While this conversation is still fairly fresh - here’s a story on a privately run valuables storage vault in Sydney, Australia. Useful for the good pics of the locking mechanisms that you see on the back of the vault doors.
Unfortunately, that article is paywalled.
Apologies - the Herald is a bit random about that. I assumed that the link was clean.
How well armored do you think the floors are? Not that I’ve seen a storm drain map that shows a five foot diameter drain running under a bank or anything.
Only in Marseilles?
That’s not how banks work, even in the old days. As George Bailey pointed out in It’s a Wonderful Life, your money is in Joe’s house.
Vault doors are mostly reinforced concrete, with an an outer cladding of stainless steel. They are not solid metal.