Wow, you're not blinded by bias, not at all. I don't care to argue one side or the other, I just know what my mom told me and what it was like getting the money out. At some point, any bank in trouble gives signs & hints that it has problems allowing withdrawals. Countrywide Bank made some announcements about delayed withdrawals, so anyone with a brain right away wanted to get their money out. Either take the reality for what it is or continue being in denial. I'm not predicting anything, just saying that it is possible, very possible and has already happened a few months ago. BTW, FDIC will not help most, if anyone in that situation.
So if you're not predicting anything, what exactly am I in denial about? There are two possible scenarios here. Either we should all run, screaming and frothing at the mouth, to our banks and pull out our money at this very instant, or we should trust that the system will hold (as it usually does) and just let the day go by. If we all run to the bank, we will cause it to fail (as you, yourself, stated that banks could not meet their depositors requests if a run commenced - and you were right). Other than that, I really don't see what denial I'm living in.
Off topic slightly. The Stat: 166% British consumer debt as a share of gross disposable income vs. 127% in the U.S.. .....Add it all up, and Britain is likely to suffer more severely than the U.S. if the current market turmoil continues, says Danny Gabay, director of Fathom Financial Consulting in London.
You can re-read the thread in which you clearly state that a bank run cannot spread to the U.S., when in fact, it already has with CFC. On top of it, you reply with facetious statements, subtly trying to make fun of those who actually consider that the possibility is real. But it's obvious where your opinion stands and it ignores what has already happened in real life. The Fed will step up, just like it did with CFC, but that move is starting its own set of problems. Seems like the system cant handle a bank run, so it just keeps on patching on bandages.
There's no cost to spreading your risk by ensuring you have no more than the insured amount at any one bank account. Any time you can reduce risk for free, you should take it. In addition, during times of financial crisis, liquidity is at a premium - it therefore makes sense to have more cash on hand. Bear in mind that your individual actions have no effect whatsoever on the actions of US banking depositors as a group. If a bank is going under, it will go under whether you withdraw your money or keep it there. So, better to withdraw preemptively and place it in a safer place. As for FDIC - it is preferable to have your cash to hand (or in safer investments like T-Bills), rather than in an insolvent bank, waiting god knows how long for an FDIC payout.
Nice redirect. First, my "no" was just to shut up SA. His babble has been on these forums in one kind or another forever. Do I think it's possible? Of course it's possible. It's possible the world will get pulverized by a giant rock from outer space tomorrow or that Kramer will grow a second head out of a zit on his forehead. Second, I ask(ed) you. What should we do? Honestly. No humor, what should we do about it?
What is this "safer place" that you believe will be available should the banking system collapse? I mean, short of wiring it to a new account in Switzerland (CHF) or the Caymans (GBP).
A safer place during a banking crisis would be safe deposit boxes, gold, directly-owned government securities (i.e. not held in custody by a broker), government savings accounts, offset-mortgage accounts (if the bank goes bust, you owe them more than they owe you), or non-fractional savings institutions. Keeping some at home would also be a good idea. Foreign accounts in places like Switzerland are good too, but if there is a US banking crisis then other developed countries will be hit as well. You can also diversify by transferring to brokerage accounts. The main thing is do not keep it all at one bank, and definitely do not have it at any institution reliant on short-term money market funding, and/or with notable mortgage exposure. Instead, spread your risk by diversifying. What deposits you do have at banks, make sure they are at the biggest ones with the largest branch network and customer deposit base (these are more likely to get a bailout). In the Northern Rock example, there were several people interviewed who had £1 million+, most of their life savings, deposited there. This is sheer lunacy even in good times. Credit risk is very real and should always be considered, especially since it can be massively reduced by simple and free/low-cost diversification. For you to advocate a "sit tight" approach is irresonsible IMO.
Good feedback. Much appreciated. My bank right now is BoA. I don't anticipate a big problem there. But I don't have all of my money there. It's in foreign currency and foreign banks as well. Russia, for instance. So the best thing I can do at the moment - short of running into the street screaming, is to "sit tight". If there are those out there with a million in one bank, then they deserve to get whatever they get.
Russian banks are even worse than US due to a very lax reserve ratio. Cash gets a premium in Moscow, almost 20% at times, because most simply do not have raw cash, it's digital money & credit. A bank run would destroy the dollar. On the other hand, the Fed propping up failing banks does the same, just much much slower. The answer seems to be the same in both cases.