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It Begins: My Brother Witnessed a Run on a Bank
Got a message from my brother. He saw the run on the IndyMac Bank in Duarte, California.
Let me introduce this with dueling headlines. From the Pasadena Star-News:
IndyMac appears close to collapse: US regulators may not be ready to protect bank
And from the LA Times:
IndyMac denies that it's close to collapse: "Depositors have been pulling money from the Pasadena-based thrift, whose share price is down 90% this year."
Today, my brother saw a crowd at the Duarte IndyMac Bank desperately trying to get their savings out. Many elderly people were claiming that they are being offered dollar for dollar on the first $100,000...after that only fifty cents on the dollar.
This, my friends, was the result of the Harding/Coolidge/Hoover economy...and it is the result of the Bush/McCain economy. Economic collapse. Let us desperately hope that this will be a fairly isolated occurance. Collapse now won't be the same as the Great Depression. I do not forsee food and fuel prices declining, so this time around we aren't going to see cheap prices going along with our high unemployment, failed farms and failed banks. It seems to me was are heading for a bizarre combination of the Great Depression and the Stagflation of the Nixon/Ford/Carter years. To paraphrase "Those Were the Days," the All in the Family Theme Song:
"Mister, we could use a man like FDR again."
Unfortunately
I've heard that the Feds are watching about 90 other banks.
The full story (well, some of it anyway)
IndyMac has been taken over by the FDIC until it can find a new owner. The first $100,000 of any person's deposits (that's for each person, not each account) is fully insured. Only the amount over $100,000 may be lost -- and in IndyMac's case, apparently only half of it (Mole's info is correct). That guarantee for the first $100,000 is standard FDIC practice, and is true of any bank nationwide (all banks are required to be FDIC members).
Included on the list of about 90 other banks (Rosalie's info is correct as well) may be Washington Mutual, or "WaMu," as they've advertised themselves. Other "Mutual" banks are probably overrepresented on the list as well, leading one to wonder how this type of bank operates.
Then there's FreddieMac and FannieMae, which are also in trouble, but may be bailed out by the federal government. I don't know all the details on them, but I'm planning to research it over the next couple of days. If, however, someone can give them here, please do so.
The key is that despite the good regulations, the strong FDIC, and the recent history of S&L bailouts during the last Bush administration, people still panic. What does that mean? It means that you can't trust Republicans with your money -- but then, you already knew that.