October 4, 2013
Even as the fearmongering over the debt ceiling hits proportions not seen since 2011 (when it was the precipitous drop in the market that catalyzed a resolution in the final minutes, and when four consecutive 400 point up and down DJIA days cemented the deal – a scenario that may be repeated again), some banks are taking things more seriously, and being well-aware that when it comes to banks, any initial panic merely perpetuates more panic, have taken some radical steps.
The FT reports that “two of the country’s 10 biggest banks said they were putting into place a “playbook” used in August 2011 when the government last came close to breaching the debt ceiling. One senior executive said his bank was delivering 20-30 per cent more cash than usual in case panicked customers tried to withdraw funds en masse. Banks are also holding daily emergency meetings to discuss other steps, including possible free overdrafts for customers reliant on social security payments from the government.”
The problem with bank runs is that often times, steps taken to mitigate future panics become self-fulfilling prophecies.
Hopefully this is not one of those cases. Then again, since increasingly fewer Americans actually have money in deposit and savings accounts with banks, there is likely nothing to worry about.