Boom and bust: It's the American way

[katty]

more: http://www.latimes.com/news/opinion/commentary/la-op-kamensky20-2008jul20,0,3241356.story

Boom and bust: It's the American way
IndyMac's crisis is hardly unique. Bank panics have been with us from the beginning.
By Jane Kamensky
July 20, 2008

Earlier this month, my mother-in-law called from Pasadena, in dire need of consultation with my husband, who serves as the family's unofficial Ben Bernanke. "Denny," she said, "rumors are flying around here. Should I pull my money out of IndyMac?"

"Don't worry about it, Mom," came the answer. "A big bank like that -- it'll never fail."

But the rumors kept coming, until so many IndyMac customers had withdrawn their funds that the Federal Deposit Insurance Corp. took control of the bank's affairs. By dawn Monday, lines of betrayed, angry and tearful depositors snaked around IndyMac branches across Southern California: a central-casting bank run in the heart of film country.

My husband -- like so many others who trusted IndyMac -- was wrong. Banks, even big banks, go under. And now, once again, the popular wisdom that banks cannot fail has been temporarily replaced by the knowledge that banks can fail. Share prices of bank stocks plunged to multiyear lows before staging a comeback last week.

This rapid oscillation between confidence and panic in the banking sector is nearly as old as the United States.

[Hydra]

1. An awesome article

That sums up what I've been saying all day.

So much paper, so little substance.

[katty]

2. yes, just the way bushco has abused our constitution