On Fri, Sep 26, 2008 at 1:11 PM, Maureen <[EMAIL PROTECTED]> wrote: > Banks are required by law to maintain enough liquidity to cover a > certain percentage of deposits. When they fall below that percentage, > the Feds step in.
Which ties back to Paul's question about withdrawing his savings and burying it in a can in his backyard. If enough people do that it can actually cause a bank to fail, even though the bank may have survived longer otherwise. Many people act on their fear and take their money out fearing the bank will fail. Ironically this very act can cause the bank to fail. This is also why FDIC exists in the first palce. During the great depression people flocked to withdraw their money and it cause calamity in the banking system. FDIC was formed to assure people that their money would be there even if the bank want down the tubes. The other big rule created during the great depression era was the rule that banks keep a certain amount of deposits onhand as cash, in case there WAS a run on the bank so that they would have enough M1 money to pay out and wouldn't run short, causing even more panic. -Cameron ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:271006 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
