Tuesday, September 18, 2007

Bank Run!

Nervous depositors lined up down the street and around the block to get their money out of the bank. A scene from the US in the depression? From one of the "emerging market" financial crises in that occurred in Asia and Latin America in the 1990's?

Nope. Britain, September 2007. The NY Times has the story, as do The Guardian and Financial Times.

In the US, deposit insurance has made banking panics largely a thing in the past - people know that the FDIC will take care of them if their bank fails. Britain's deposit insurance is less generous, but the government has promised to make the depositors whole. But many still want their money out. Here's a comment from the FT on the UKs deposit insurance scheme, and a critique of the government's action from Willem Buiter of the LSE.

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