On Sep 30, 2008, at 2:45 PM, Michael Pollak wrote:
> Unfortunately this is wrong, because the first sentence is wrong.
> None of the banks runs we've experienced so far have anything to
> with deposit funding. They are a problem of investment funding. And
> that's not covered by the FDIC and can't be.
No. In a database of 124 systemic banking crises assembled by two IMF economists, about half the countries had deposit insurance. Deposit insurance is not enough to cure a crisis. Curing a crisis requires an expensive recapitalization of the banking system. If it's done through the FDIC, fine, but there's no way to avoid spending serious amounts of money.
Doug