Levy on Pledged CD

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Question:

The bank was served with a tax levy, and the customer has a certificate of deposit. However the customer assigned the certificate of deposit to the bank for collateral on a loan. The hold is on the entire CD amount. Is the bank obligated to release our hold and pay the levy?

Answer:

The severity of this question begs for counsel's advice. While I believe your collateral agreement may stand, if there is equity in the CD vs. the loan payoff, that may have to be sent. You need the advice of the one who will defend your actions.

First published on BankersOnline.com 10/17/05