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>You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out. Sure you can. You clos
by treis 4y ago
>You can't prevent a bank run if people are going around whatsapp groups of major depositors telling each other to get their money out.
Sure you can. You close the bank when it's insolvent and people are saying to get your money out.
>They absolutely did, even when the rules didn't say they had to?
Yes and my post was to illustrate why. Perhaps that was not as clear as it could be.
- pjc50 4y ago> You close the bank when it's insolvent and people are saying to get your money out. How does this materially differ from what happened? Is there a federal power to temporarily close banks? Doesn't the run immediately continue when reopened?
- treis 4y agoIt doesn't because they made all the depositors whole. If they didn't do that then the last 30% or whatever depositors remained would have taken all the losses. Regulators have broad power to close banks. They could have done so when SVB failed to raise equity or really before that. Run stops because deposits are transferred to a healthy bank.