[bunderbunder]

From the Federal Reserve's Consumer Compliance Handbook, section II, Regulation CC ("Availability of Funds and Collection of Checks"), pp 11-12:

  Some small financial institutions do not keep cash on 
  their premises and do not offer cash withdrawal services 
  to their customers. Others limit the amount of cash on
  their premises, for reasons related to bonding, and as a
  result reserve the right to limit the amount of cash a
  customer may with­ draw on a given day or to require advance
  notice for large cash withdrawals. Nothing in the 
  regula­tion is intended to prohibit these practices if 
  they are applied uniformly and are based on security,
  operating, or bonding requirements and if the pol­icy is
  not dependent on the length of time the funds have been
  in the customer’s account, as long as the permissible
  hold has expired.  However, the regulation does not
  authorize such policies if they are otherwise prohibited
  by statutory, regulatory, or common law.

(source: http://www.federalreserve.gov/boarddocs/supmanual/cch/efaa.p...)

In other words: Unless they're violating some technicality in the law (probably a state or local law), it's probably entirely legal. Probably safest to talk to an attorney before coming to any conclusions on the matter.