Little Known Service at Your Local Bank: Medallion Stamp
Having an account at a local brick-and-mortar bank or credit union can sometimes be very useful. A reader described his experience in the forum with his local banks when he was in need of a Medallion stamp guarantee (also called a Medallion signature guarantee). As you can read in his post, it can be difficult to get a bank to provide this.
Wikipedia has a good summary of a Medallion signature guarantee:
In the United States, a medallion signature guarantee is a special signature guarantee for the transfer of securities. It is a guarantee by the transferring financial institution that the signature is genuine and the financial institution accepts liability for any forgery. Signature guarantees protect shareholders by preventing unauthorized transfers and possible investor losses. They also limit the liability of the transfer agent who accepts the certificates.
How is this different than a notary public? This BankersOnline.com article summarizes the difference:
The Medallion Signature Guarantee should not ever be confused with a notary public. The big difference is in the liability. The organization that guarantees the authenticity of the signature is liable for the financial value of the transaction.
More details about the differences are listed in this BankersOnline.com article Medallion Stamp vs. Notary Public.
One type of security that can require a Medallion signature guarantee is a Treasury Bill. The reader who wrote about his experience inherited T-bills, and he needed a Medallion stamp for the Treasury form 1455 that is used to request a distribution of T-bills.
Another type of security that can require a Medallion signature guarantee is an annuity. My dad had a small annuity at Nationwide Financial. When he passed away, I noticed that the annuity claim form required a Medallion stamp if the withdrawal request is greater than $50,000. Since the annuity amount was under this, I didn't have to go through the hassles that the reader described.
Where do you go if you need a Medallion stamp? A local bank or credit union is the first place to look. The institution has to be a participant in the Medallion stamp program. There's a enrollment cost, so many institutions may not be participants. Program participants also have to worry about liability. As described in this BankersOnline.com article, "If the signature turns out to be a forgery your institution will be expected to pay the loss."
Due to the cost and liability concerns, banks will probably only provide the Medallion stamps if you are a customer. This is what the reader described. His local branches of Citibank, Wells Fargo, HSBC and Bank of America only offered this service to customers. Wells Fargo not only required an account, but also required that the account be at least six months old. HSBC required that the customer have a brick-and-mortar account. The HSBC branch refused to provide any service to those with online HSBC accounts. Bucking the recent trend, Bank of America had the best service. According to the reader, the Bank of America branch was willing to provide the stamp even though he only had a Bank of America credit card.
If you are looking for a local bank or credit union, you might want add the Medallion stamp program as another item for your checklist. There are many other features that will likely be above this. I described several of these in my post Finding the Best Free Checking Accounts at the Best Credit Unions. The Medallion stamp may be one reason to keep an account at a large bank. It would be interesting to know how many community banks and credit unions offer this program.