FDIC May Not Have Enough To Bail Out Banks §

[poetpaladin]

IndyMac Bank failed and the government has taken over

Comments

[caitlin]

The question here is whether or not the statement on WaMu will cause a run on a lot of other banks too... (That is how IndyMac's failure started, and, if I remember right, that is how things started during the 20th Century's Depression)

I will start looking into moving my money into another bank (I already have another account at another bank).

C.

[poetpaladin]

Well, the truth is, some of these banks are truly in trouble. Can we really save these banks by not pointing out the truth?

[caitlin]

That was not what I was suggesting.

But there are likely people who will read the statement "[Such and such] Bank is in trouble", panic, and cause a run on a bank, CAUSING a collapse (which is what I heard happened with IndyMac - my source is NPR) meaning more people - bank employees, those who did not have a chance to pull their money - will be in trouble.

I will also note that a lot of banks give their employees free accounts, and a lot of people take advantage of that.

C.

[writerspleasure]

once again we see, as with social security and medicare and government water infrastructure, that powerful political forces result in underpricing of government-provided services. in this case, the premiums were too low and the umbrella of protection too broad. as is well known, this leads to significant moral hazard consequences.

[poetpaladin]

Well, I'm with you on moral hazard as an issue here.

[diepunyhuman]

Good thing I'm not affiliated with any of these banks, but I will do some homework.

[poetpaladin]

Here's a rating site:
http://www.bankrate.com/brm/safesound/ss_home.asp