IndyMac Depositors Line Up To Get Their Money

July 15, 2008 at 11:01 am  ·  Category: Business Culture and Current Events, Market Commentary, Stocks

In a modern financial system, nothing is more frightening than a run on the bank.

– Tom Petruno, “When faith is frayed”, July 12, 2008, LA Times

As most of you know by now, the Federal Government closed and siezed Pasadena, CA-based IndyMac Bank on Friday.  IndyMac saw a run on its deposits in the wake of a letter by Senator Charles Schumer questioning its viability in the wake of large losses on mortgages.

In a Wall Street Journal article this morning on the IndyMac situation there was a picture of a line outside of the IndyMac branch in San Marino, CA yesterday of people waiting to get their money back (Queue At IndyMac Photo).

This kind of thing is pretty scary.  I have to believe that many depositors are pulling money from other banks and this drain on bank’s cash could potentially lead to more bank failures.

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

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