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What Is a Run on the Bank?

Savvy ATM: Why a Run on the Bank Is So Bad

Bad banking news has many people fearing their life savings will suddenly vanish and has created a somewhat panic-ridden population. Questions are flying about pulling money from the bank in case it collapses, but that's the most counter-productive thing to do in this scenario. Keeping your money under your mattress is not the way to go!

According to Investopedia, a bank run is "a situation in which numerous bank customers try to withdraw their bank deposits simultaneously and the bank's reserves are not sufficient to cover the withdrawals." So, the fear that a bank will become insolvent and results in a bank run, is the exact reason a bank could become illiquid. When it comes to your money, panic-induced decisions are rarely good ones.

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Row-D Row-D 7 years
With the government in the jam that its on, I too wonder what being FDIC insured really means. This past Monday I took out 1K from the bank....
bransugar79 bransugar79 7 years
The FDIC insure your money up to $10,000 right? And if all the banks go under do you really think the government has enough money to pay everyone their $10,000? Even if they do it would more than bankrupt the country and if they just print more money it increase inflation and the money is worth nothing. That coupled with the realization the our government is using their (OUR) money to bail out these huge institutions that are about to fail doesn't give me so much confidence in the economy. I worry for people with big investments but for people like me with just the money that's in my checking account it could be a disaster too. So I'll leave my money where it is for now but if it looks like things are going south I'm definitely cashing in
SugarKat SugarKat 7 years
At this point I don't trust that the government has all the money necessary to keep the FDIC going...
gemsera gemsera 7 years
Unlucky for me, the FDIC doesnt care about UK accounts. We have a similar setup - but no one trusts the government, they screw us over enough!
bluebellknoll bluebellknoll 7 years
My friend works for a bank and told me that he has been opening accounts for a lot of people that have closed their WaMu accts.
bellaressa bellaressa 7 years
I am looking more closely to all my accounts, even my 401k. It's scary to see things going down but I have faith that our economy will be revived. It will not be short, I have a feeling this weakness and adjustment may take more than 5 years. I hope I'm wrong but I doubt this one.
RosaDilia RosaDilia 7 years
The FDIC is backed by the US government regardless of how bad the situation is. I bank at two separate institutions and as long as my money is protected I have no worries.
gemsera gemsera 7 years
This is all well and good, but I dont think it pays to be complacent. We should all be watching things very very closely and if your bank starts to wobble, cut and run. Sorry but its my money they are gambling with and ill do with it what I please. A few weeks ago I changed accounts to HSBC for a good reason - international transfers were easier - and left Lloyds TSB who last Friday were about to go under. they have now been bought out, but still, they would have gone under with the little cash I have that I need to survive. I refuse to go on social security and not have a roof over my head.
SugarKat SugarKat 7 years
But then AIG goes under and they're a major insurance company. What if your insurance co. or the FDIC goes under??? See, nothing is firm, but at the same time, if you have enough to get by in your pocket then you should be ok. It seems like all our money is virtual anyway. I pay all my bills online...I receive mine and my hubby's paycheck online. Some places require cash, but not many so really do we need the money? I don't feel like my debit card will go bankrupt if my bank doesn't have enough hard cash.
ilanac13 ilanac13 7 years
i think that people should remember the post from yesterday about insured accounts and insured banks and remember that if your bank is FDIC insured - your money is safe. otherwise we'll end up in another situation like the great depressions where people pulled out their money and we were in a big hole....i think that things will turn around - they have to at some point and we just need to have faith and be patient.
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