Tuesday, September 16, 2008

Shareholders Run, Much Like Depositors Once Did (AIG; WM)

From MarketWatch:

For the first time in more than 70 years, a psychological “contagion” is threatening to drive financial concerns out of business, but this time American International Group Inc., Washington Mutual Inc. and others are facing a shareholder run.

Some economic historians say a sporadic wave of bank failures in 1930 triggered contagion, as depositors preempted similar failures of their own banks and perpetuated the crisis by demanding their money. In a series of bank runs, lenders fell like dominoes throughout the early 1930s, and the resulting tightening of credit contributed to a lasting recession....MORE

Our post on Washington Mutual last night has the bank run scene from It's a Wonderful Life (scroll down).

It was ever thus.