For general discussion and debate. Possible talking point: Are media making matters in the banking industry worse?
Even as the Bush administration moved to rescue the nation's largest two mortgage companies, confidence in the banking sector spiraled downward Monday. In the Los Angeles area, lines snaked around IndyMac Bancorp branches for blocks, as customers made withdrawals from the bank, which failed last week. In Cleveland, National City Corporation denied a rumor that its customers were also demanding their money.
As it pertains to IndyMac, the head of the FDIC said yesterday that publicity concerning problems at that S&L led customers to remove deposits ending up in the OTS having to take them over. As media focus more and more attention on other banks speculated as being "in trouble," will it lead to more runs and worsen the problem?
After all, according to the head of the FDIC, as of March 31, there were only 90 banks and S&Ls on its troubled list, with combined assets of only $28 billion. These are VERY small institutions. Yet, the hysteria now -- potentially media driven -- is endangering some of America's largest banks. Thoughts?
