Well I’m interested now. It certainly is the case where I live, and presuming we are talking about the US here, I did a quick skim through the first few results on google and they seem to agree that it’s a debtor/creditor relationship.
How else would you describe the legal arrangements of a bank account then?
The transaction is “I give the bank money, and they have to give it back later”. How can we arrange that legally without transferring ownership? I only know these ways:
Bailment: That would mean the bank keeps the physical bills (or other valuables) in a proverbial or literal safe with my name on it, to return the exact same items later. Of course banks offer that service, but that’s not what we’re talking about.
Trust: The bank takes my money and invests it on my behalf. It does not go on the bank’s books, and they cannot use my money for their own purposes (e.g. as security for loans, to fulfil capital requirements, invest it themselves and keep the proceeds, etc.). This is obviously not the case.
Agency: The bank takes my money and executes transactions on my behalf, according to my orders. Again, obviously not the case.
Am I missing something? Is there some special law for bank accounts? I’m genuinely interested.
Think about it this way, if I’m going after your money, do I sue you, or do I sue the bank?
It’s funny you mentioned bailment, the bank is absolutely required to keep enough cash on hand in order to satisfy what the FDIC deems to be a reasonable amount of coverage for their deposit accounts. (search “demand deposit account”)
If I owe you money, and somebody else owes me money, yea of course you would sue me, not that other person. But I could write over some of the debt I’m owed to you to clear my debt to you.
And isn’t exactly how debt enforcement works? You win in court and the court tells the bank (or forces me to tell the bank) to take x amount out of my account and put it into your account. The debt I was owed gets transferred to you, which clears my debt to you.
Well I’m interested now. It certainly is the case where I live, and presuming we are talking about the US here, I did a quick skim through the first few results on google and they seem to agree that it’s a debtor/creditor relationship.
How else would you describe the legal arrangements of a bank account then?
You own the money in your account, simple as that for individual accounts.
The transaction is “I give the bank money, and they have to give it back later”. How can we arrange that legally without transferring ownership? I only know these ways:
Bailment: That would mean the bank keeps the physical bills (or other valuables) in a proverbial or literal safe with my name on it, to return the exact same items later. Of course banks offer that service, but that’s not what we’re talking about.
Trust: The bank takes my money and invests it on my behalf. It does not go on the bank’s books, and they cannot use my money for their own purposes (e.g. as security for loans, to fulfil capital requirements, invest it themselves and keep the proceeds, etc.). This is obviously not the case.
Agency: The bank takes my money and executes transactions on my behalf, according to my orders. Again, obviously not the case.
Am I missing something? Is there some special law for bank accounts? I’m genuinely interested.
Think about it this way, if I’m going after your money, do I sue you, or do I sue the bank?
It’s funny you mentioned bailment, the bank is absolutely required to keep enough cash on hand in order to satisfy what the FDIC deems to be a reasonable amount of coverage for their deposit accounts. (search “demand deposit account”)
If I owe you money, and somebody else owes me money, yea of course you would sue me, not that other person. But I could write over some of the debt I’m owed to you to clear my debt to you.
And isn’t exactly how debt enforcement works? You win in court and the court tells the bank (or forces me to tell the bank) to take x amount out of my account and put it into your account. The debt I was owed gets transferred to you, which clears my debt to you.