This is not to say that retail runs cannot occur. But with a strong F.D.I.C. at hand, it’s hard for them to have the destructive, self-fulfilling dynamic seen at the onset of the Great Depression, in which loss of confidence means withdrawals, which triggers further loss of confidence, and banks move quickly toward being out of business when they don’t have in hand enough cash or assets that can quickly be turned into cash.
Sadly, it turns out we haven’t outgrown runs. Rather, we have learned since mid-2007 that other kinds of runs — let’s call them wholesale or professional investor runs — are not only possible but also increasingly likely in the United States.
This is more or less what happened to Bear Stearns. See the Vanity Fair article about it. It was all over in one week.
If - and it's a big if - we have a banking collapse, it will happen quickly, at the speed of electronic trading. I don't think your average American is going to haul off to the bank and cause a run. But if a clever short selling person or organization (ala George Soros v. Bank of England) could cause an electronic run, it could be a big problem. Because, if, say, someone pulls this off against Bank of America, and the FDIC sends you a check to cover your loss, ... where would you cash it?
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