Protecting Banking Assets

I thought this was an interesting article in today’s Wall Street Journal.  While reading it I got to thinking about some ways we could improve the money transfer system and how we could reduce the potential for theft.

The article summarizes the theft of money by a small business in New York and what they have had to go through to get back some of the money from various banks.  Most of the money has been recovered but about 30% of it remains uncollected.   The theft was detected by the company and it took place over hours, not days.

I believe their needs to be a default window for any fund transfer that would allow the party to pull it back or change their mind.

Here is the logic.  Fund transfers need to originate from the asset owner much like a credit card or online bill pay or me walking into a store and purchasing it.  So if a company needs to do a wire transfer then they would submit it like now.  But it gets caught in this window for say one or two business days.  This would allow the asset owner to cancel the transfer and the money could be released and put back immediately.  No harm done.

So my question is, what is the rush?  Society is in such a rush these days that as soon as you hit enter there is no turning back.  This is convenient for booking a hotel or buying a movie ticket.  But when it comes to moving funds between banks or countries this is simply not practical.  Give the honest people a chance to say no.  When companies suffer a data loss they could bounce a payroll or not be able to ship product causing many others to get hurt.

According to this article banks like Bank of America are not helping them out and letting them get their money back.  They knew about this theft hours after it took place and they still have no recourse with the banks?  That is absurd.  Their rights were violated because of thieves and they aren’t given any cover.  If you come up to me on the street and steal my wallet I will chase you and get it back.

Something has to change.  Thieves will continue to manipulate the system and take advantage of our conveniences unless we do things differently.  The only job of government is to protect its citizens.   Let’s not forget that.