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>If you don't take it out, there is no run and no problem. I have heard this "argument" before from people like Alex Mashinsky, who's accused of having run a p

>If you don't take it out, there is no run and no problem. I have heard this "argument" before from people like Alex Mashinsky, who's accused of having run a ponzi scheme. One would think all customers being able to withdraw their funds should be the base minimum requirement any legitimate bank must be able to fulfill.

xiphias2 4y ago
What you are describing is called a narrow bank, and it exists in Norway. There were people trying to create narrow banks, but they were rejected by regulators, because ,,everybody would take their money out of current banks and put it there’’. Also there is one narrow bank in Norway, if you have at least $50M, maybe big companies should think about voting with their wallets.
- trompetenaccoun 4y ago
  Very interesting, thanks for the info! I wasn't aware a narrow bank already existed. And apparently the Norwegian financial system has not collapsed :)
astrange 4y ago
Why would a bank need to support withdrawing 100% of its funds at once with no warning? Nobody wants to do that. (It's actually impossible to create a bank that allows doing that; regulators won't allow it.)
- trompetenaccoun 4y ago
  Most are under the illusion that when they give money to a bank, the bank keeps it safe for them. The FED not allowing safe banks but actually forcing them to take unnecessary risks is part of the problem¹. It's completely false that nobody wants safe banking, many asset managers do for obvious reasons because this is a huge risk for anyone dealing with accounts in excess of the insured amount. Also if you think banks that support full withdrawals (and thus making bank runs impossible) should not exist, what percentage do you think they should support? 50%, 30%? Should they have enough money to at least handle 10% of customers withdrawing? The real legal requirement might worry you if you know the figure. I encourage you to look it up. ¹ https://www.chicagobooth.edu/review/safest-bank-fed-wont-sanction https://www.chicagobooth.edu/review/safest-bank-fed-wont-san...

xiphias2 4y ago

What you are describing is called a narrow bank, and it exists in Norway. There were people trying to create narrow banks, but they were rejected by regulators, because ,,everybody would take their money out of current banks and put it there’’. Also there is one narrow bank in Norway, if you have at least $50M, maybe big companies should think about voting with their wallets.

trompetenaccoun 4y ago
Very interesting, thanks for the info! I wasn't aware a narrow bank already existed. And apparently the Norwegian financial system has not collapsed :)

astrange 4y ago

Why would a bank need to support withdrawing 100% of its funds at once with no warning? Nobody wants to do that. (It's actually impossible to create a bank that allows doing that; regulators won't allow it.)

trompetenaccoun 4y ago
Most are under the illusion that when they give money to a bank, the bank keeps it safe for them. The FED not allowing safe banks but actually forcing them to take unnecessary risks is part of the problem¹. It's completely false that nobody wants safe banking, many asset managers do for obvious reasons because this is a huge risk for anyone dealing with accounts in excess of the insured amount. Also if you think banks that support full withdrawals (and thus making bank runs impossible) should not exist, what percentage do you think they should support? 50%, 30%? Should they have enough money to at least handle 10% of customers withdrawing? The real legal requirement might worry you if you know the figure. I encourage you to look it up. ¹ https://www.chicagobooth.edu/review/safest-bank-fed-wont-sanction https://www.chicagobooth.edu/review/safest-bank-fed-wont-san...