Tuesday, July 15, 2008
Run on the Bank
This picture was taken in 1911, and shows a run on the Nineteenth Ward Bank in New York City. Rumors of liquidity concerns created a run, that then in fact, created a liquidity crisis, which led to the bank being closed.
It is interesting that we are seeing similar scenes play out again today, with a bank run occurring at a major California bank just this last Friday, leading to the FDIC closing the bank, and taking over operations. I saw pictures in the newspaper of a crowd at the closed bank, trying to get their money.
No bank can withstand all depositors wanting to withdraw their money at the same time. It looks like we are entering a period where bank runs are going to be common again.