August Newsletter – Safe Deposit Boxes Aren’t Safe

When I think of safe deposit boxes, I think secure valuables. Two hundred years ago, jewelry stores used to keep valuables for wealthy customers. I remember hearing that in the early 1800s in Boston, Shreve, Crump & Low held customers’ valuables in a vault similar to a safe deposit box, and during a fire, the proprietor had to keep looters away with a firearm.

The current concept of a safe deposit box comes from banks storing large amounts of cash, gold, and silver in their vaults. As currency changed from gold and silver to paper money, the extra room in the bank vaults was rented out to hold customers’ valuables in mini vaults within the vaults. However, the banking system never regulated those vaults within vaults, because they are not currency. The false sense of security has lasted over the past decades. The following article sheds some light on the true nature of safe deposit boxes, and whether they are as safe as you may have assumed!

~Rich

Safe Deposit Boxes Aren’t Safe
By Stacy Cowley, The New York Times

In the early 1980s, when Philip Poniz moved to New Jersey from Colorado, he needed a well-protected place to stash his collection of rare watches. He had been gathering unusual pieces since he was a teenager in 1960s Poland, fascinated by their intricate mechanics. His hobby became his profession, and by the time of his relocation, Mr. Poniz was an internationally known expert in the history and restoration of high-end timepieces.

At first, he kept his personal collection in his house, but as it grew, he wanted something more secure. The vault at his neighborhood bank seemed ideal. In 1983, he signed a one-page lease agreement with First National State Bank of Edison in Highland Park, N.J., for a safe deposit box.

Over the next few decades, the bank — a squat brick building on a low-rise suburban street — changed hands many times. First National became First Union, which was sold to Wachovia, which was then bought by Wells Fargo. But its vault remained the same. A foot-thick steel door sheltered cabinets filled with hundreds of stacked metal boxes, each protected by two keys. The bank kept one; the customer held the other. Both were required to open a box.

In 1998, Mr. Poniz rented several additional boxes, and stored in them various items related to his work. He separated a batch of personal effects — photographs, coins he had inherited from his grandfather, dozens of watches — into a box labeled 105. Every time he opened it, he saw the glinting accumulation of his life’s work.

Then, on April 7, 2014, he lifted the thin metal lid. Box 105 was empty.

“I thought my heart would fail,” Mr. Poniz said. He paused in his retelling of the memory. At age 67, he has a strong Polish accent and speaks English carefully. He struggled to find the right words to describe the day he discovered his watches were missing. “I was devastated,” he said. “I was never like that in my life before. I had never known that one can have a feeling like that.”

There are an estimated 25 million safe deposit boxes in America, and they operate in a legal gray zone within the highly regulated banking industry. There are no federal laws governing the boxes; no rules require banks to compensate customers if their property is stolen or destroyed.

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