The History of American Bank Runs Since 1984 ⋆ Politicrossing
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The History of American Bank Runs Since 1984

What – exactly – happens in a bank run?



The bankruptcy of Silicon Valley Bank has brought the average person’s attention to the old term, “a run on the bank,” but what exactly does that mean and what have been the biggest runs in our lifetime?

A bank run is a phenomenon in which a large number of depositors withdraw their funds from a bank at the same time, typically due to concerns about the bank’s solvency. This can lead to a liquidity crisis for the bank, which can ultimately result in its failure. In the United States, there have been several notable bank runs since 1950, each with their unique causes and consequences. In this article, we will examine some of the most significant bank runs in American history and explore the potential dangers the US faces for future bank runs.

What exactly happens in a bank run?

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During a bank run, depositors line up at the bank to withdraw their funds. As more and more depositors withdraw their funds, the bank’s reserves become depleted, and it becomes increasingly difficult for the bank to meet the demand for withdrawals. This can lead to a vicious cycle in which the bank’s financial difficulties are exacerbated by the run, leading to even more depositors attempting to withdraw their funds.

In some cases, the bank may be able to satisfy the demand for withdrawals by using its own reserves, borrowing from other banks, or selling assets. However, if the bank is unable to meet the demand for withdrawals, it may be forced to declare bankruptcy or be taken over by regulators. This can result in losses for depositors, as they may only be able to recover a portion of their funds from the FDIC, which insures deposits up to a certain amount.

The collapse of a bank can have wide-ranging consequences for the economy. Foremost, it can lead to a loss of confidence in the banking system as a whole, as depositors begin to question the safety of their funds. This can lead to other banks experiencing runs, potentially causing a wider financial crisis.

The major bank runs since 1984

Continental Illinois National Bank and Trust Company (1984)
The Continental Illinois National Bank and Trust Company was the seventh-largest bank in the United States when it experienced a bank run in 1984. The bank was heavily invested in the energy sector, which suffered from falling oil prices and rising interest rates. As a result, the bank experienced a significant increase in loan losses and was unable to meet its depositors’ demands for withdrawals.

The US government stepped in to prevent a complete collapse of the bank, providing a $4.5 billion bailout and taking control of the bank’s operations. This marked the first time that the US government had intervened to save a failing bank since the Great Depression.

Bank of United States (1991)
The Bank of United States was a New York City-based bank that was founded in 1913. The bank’s primary customers were immigrants and small business owners, and it was known for its high-interest rates and aggressive marketing tactics.

In the late 1980s, the bank’s management began to make increasingly risky loans to real estate developers, many of which defaulted. This led to a decline in the bank’s assets and a loss of confidence among its depositors.

On December 11, 1990, the bank was closed by the Federal Deposit Insurance Corporation (FDIC), and depositors were only able to recover a portion of their funds. The bank’s failure was one of the largest in US history at the time, with losses estimated at $2.5 billion.

IndyMac Bank (2008)
IndyMac Bank was a California-based bank that specialized in subprime mortgages. The bank’s aggressive lending practices and lax underwriting standards led to a high number of defaults, and the bank was eventually seized by the FDIC in July 2008.

The bank’s failure was significant, with losses estimated at $10.7 billion. The failure also had wider implications for the US financial system, as it marked the largest bank failure since the Great Depression and contributed to the wider financial crisis that began in 2008.

Washington Mutual (2008)
Washington Mutual was a Seattle-based bank that was one of the largest savings and loan institutions in the United States. The bank had a significant exposure to the subprime mortgage market, and as a result, it experienced significant losses when the housing market collapsed in 2008.

The bank was seized by the FDIC in September 2008, and its assets were sold to JPMorgan Chase. The failure was significant, with losses estimated at $307 billion.

Northern Rock (2007)
Northern Rock was a British bank that experienced a bank run in 2007. The bank had been heavily invested in the US subprime mortgage market and was unable to obtain funding from other banks due to concerns about its solvency.

As news of the bank’s difficulties spread, depositors began to withdraw their funds, leading to a run on the bank. The UK government eventually nationalized the bank to prevent its collapse, and it was later sold to Virgin Money.

The potential dangers the US faces for future bank runs

Despite the significant bank failures of the past, there are several potential dangers that the US faces for future bank runs. First, the US banking system remains highly interconnected, with many large banks holding significant exposure to each other. This means that the failure of one bank could potentially lead to a domino effect, with other banks also experiencing runs as a result.

Second, there is growing concern about the rise of digital currencies and the potential for these currencies to disrupt traditional banking systems. While digital currencies such as Bitcoin and Ethereum have yet to achieve mainstream adoption, there is a risk that they could become more widely used in the future, potentially leading to a loss of confidence in traditional banking systems.

Third, the US banking system remains highly leveraged, with many banks holding large amounts of debt relative to their equity. This means that even small losses can have a significant impact on a bank’s balance sheet, potentially leading to a loss of confidence among depositors.

While the US banking system has weathered several significant bank runs in the past, it remains vulnerable to future crises, including this latest run. To prevent future bank runs, policymakers will need to address some of the underlying vulnerabilities in the banking system, such as high levels of leverage and interconnectedness. Additionally, regulators will need to closely monitor emerging risks, such as the rise of digital currencies and the impact of climate change on the banking system. Only by taking these steps can we hope to prevent future bank runs and maintain stability in the US financial system.

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Is Investing in Gold a Good Idea Now?

Investing in gold has been a popular choice for investors for centuries.



Investing in gold has been a popular choice for investors for centuries. It has been valued as a store of wealth and a safe haven asset that can protect against economic uncertainty. In times of rising inflation and falling stock prices, investing in gold can be an excellent idea. In this article, we will explore the reasons why gold is a great investment in such times and why investors should consider including it in their portfolio.

Inflation is a significant concern for investors because it erodes the purchasing power of their money. As the prices of goods and services rise, the value of currency declines. This makes it more expensive for investors to buy the same goods and services, reducing their purchasing power. Inflation can also lead to lower interest rates, which can further reduce the value of savings and investments.

Gold is often considered an inflation hedge because its value tends to rise during periods of high inflation. This is because the price of gold is tied to the global supply and demand for the metal. When inflation rises, investors often seek out assets that are considered safe havens, like gold. As more investors buy gold, demand for the metal increases, pushing up its price.

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Another reason why gold is a great investment when inflation is rising is that it is not tied to any particular currency or economy. Unlike stocks, bonds, or real estate, gold is a physical asset that can be held outside of the financial system. This means that its value is not directly affected by the performance of any particular economy or currency.

When stock prices are falling, investors often look for alternative assets to diversify their portfolio and reduce their risk exposure. Gold can be an excellent addition to a portfolio during such times because it has a low correlation with stocks. This means that when stock prices are falling, the price of gold is often rising, providing investors with a way to offset losses in their equity investments.

The price of gold is also less volatile than the stock market. While stock prices can fluctuate dramatically in response to news or events, the price of gold tends to be more stable. This makes it a useful asset for investors who are looking for a way to preserve their wealth without exposing themselves to the risks of the stock market.

Another reason why gold is a great investment during times of economic uncertainty is that it is a highly liquid asset. This means that it can be easily bought and sold on the open market, providing investors with a way to quickly convert their assets into cash. This can be particularly useful during times of economic stress when access to cash may be limited.

Investing in gold can also provide investors with a way to diversify their portfolio beyond traditional assets like stocks and bonds. By holding a mix of assets that are not closely correlated with each other, investors can reduce their overall portfolio risk and potentially increase their returns. This is because diversification can help to offset losses in one asset class with gains in another.

There are several ways that investors can invest in gold. One way is to buy physical gold, such as coins or bars, and hold it in a secure location. Another option is to invest in exchange-traded funds (ETFs) that are backed by physical gold. These funds track the price of gold and can be bought and sold on stock exchanges like regular stocks.

Investors can also invest in gold mining companies. These companies are involved in the exploration, extraction, and sale of gold. Investing in gold mining stocks can be a way to gain exposure to the gold market while also benefiting from the growth potential of individual companies.

Investing in gold can be an excellent idea when inflation is rising and stock prices are falling. Gold is often considered an inflation hedge because its value tends to rise during periods of high inflation. It is also a safe haven asset that can protect against economic uncertainty.

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The Tensions that Will Define America’s Future



Agreeing to participate in Robert Tucker’s Pacific Coast Futures Retreat in Santa Barbara has challenged me to explore some of the trends and forces that will influence America’s future. The most impactful forces that define periods in history are often not linear. They are cyclical, a tension of forces that force movement between two extremes. Defining such tensions and where we are on them can open us to opportunity and possibly save us from disasters of our own making. Here are ten tensions in play at this time in history:

Energy Scarcity or Energy Abundance: Affordable energy is needed for economies to prosper and citizens to reach their own potential. With the current administration’s rejection of fossil fuels and promotion of specific alternative energies, energy scarcity with its inflationary pressure is winning the day. Within the next ten years, increased use of nuclear energy, less restrictions on fossil fuels, and developments in fusion energy will help reestablish energy abundance.

Embracing Technological Innovation or Rejection of Technology: Rapid technological innovation and artificial intelligence (AI) have increased our dependence on devices to perform daily activities. This trend will increase with those rejecting such advances falling behind and limiting their employment opportunities. Today, embracing innovation is winning the future, but there are dangers on the horizon. Will the AI innovations we create eventually create machine cognition that becomes hard to control increasing resistance?.

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Human Relationships or Virtual Reality: You don’t have to look far to see the preoccupation with smart phone interaction in place of actual social conversations. Expect that metaverse advances in the use and quality of virtual reality (VR) interaction and augmented reality (AR) headsets will become more intense and attractive. True relationships take time, can be frustrating, and are seldom as consistently satisfying. Sadly, pornography will likely be leading the way in driving the expansion of virtual reality. This powerful force will strike a blow at our social fabric and cohesion.

Government Dependence or Personal Responsibility: Biden’s administration has argued for guaranteed income and established more government entitlements. With a small Republican majority in the House and Biden’s veto power, more citizens remain dependent on the government, and those producing services and products face increased taxes. The conflicting draw of socialism and capitalism will always be with us, but free-enterprise capitalism will win the future on the basis of economic results.

Soft on Crime or Strong Enforcement: We’ve witnessed increased criticism of law enforcement abuse and growing demands to defund the police. Traditionally, one of the basic functions of a civil society is for authorities to hold people accountable for crimes and protect citizens and their property. Far too many district attorneys and politicians are refusing to prosecute criminals and are calling for gun control. With citizens feeling unsafe, guns and private security systems have proliferated. The growing call for stricter enforcement will continue to grow in response to the riots and increases in crime. Law and order is a winning campaign issue for 2024 and beyond.

Peace or War: The longing for peace and the reality of war have always been with us. With the proliferation of more powerful weapons, waging war is far more destructive. There is hope that diplomacy, global economic interdependence, and the resulting economic opportunity will be enough to maintain world peace and limit destructive conflict. Unfortunately, the existence of biological, nuclear, EMT weapons makes the likelihood of mutual destruction a frightening reality. The current open conflict in Ukraine gives war a scary advantage for the immediate future.

Out of Many One or Out of Many Tribes: The civil rights movement and the dream of Martin Luther King Jr. was to make our motto e pluribus unum, “out of many one,” a reality. Since that time there has been a strong focus and progress in eliminating racial bias. Recent societal forces have worked to divide citizens by skin color to justify ‘special interest” rewards for certain groups. A reaction to this new “tribal racism” is beginning to gain support and fuel a fight against special interest reparations for past racism. Expect a hard-fought resistance to reparations and a renewed call common rights and responsibilities for all citizens, no matter their age, gender, race, or ethnicity.

School Choice or Public Schools: After the poor performance and questionable indoctrination from public schools, there is a strong drive for school choice. Parents want more control over what schools children attend and what they are taught. With strong minority support, this is a trend that will win the day and result in a better education for our children.

Open Borders or Controlled Immigration: There is no question that we need more workers to continue to drive our economy. With the flow of drugs and illegal immigrants adversely impacting cities throughout the country, there is renewed interest in controlling our borders. Expect a resurgence in demands for secure borders, accountability for drug cartels, and increases in legal immigration.

Greed or Compassion: America has always supported individuals pursuing happiness and success, but it has valued others being able to do the same. A commitment to compassion supports benevolent self-interest where compassion for one’s fellow man is realized as the only way for all to thrive. Care for one’s community over selfishness will remain a strong force that should win the day in coming years.

Secular or Sacred: America has been a Judeo-Christian country that anchored its freedoms and future in the assurance of a loving God who cares about every individual and demands ethical behavior. Dostoevsky’s would observe, “If there is no God, everything is permissible.” Without faith, ethical absolutes are not shared. Although there’s been a decrease in church attendance, there seem to be signs of a spiritual revival. In tough times, people search for and depend on God. Expect a renewed focus on faith, ethics, and involvement in religious communities in the challenging times ahead.

At any given time, all of these tensions become forces that define what the future holds for countries and individuals. There are dangers ahead that must be managed, but tough times develop stronger citizens and demand more responsive politicians. Those who thrive in these times will do so by finding ways to tap and capitalize on the ascending forces impacting society. Thankfully for America, President Biden’s radical liberal changes have created strong counter forces that will result in a rejection of many unpopular changes and fuel a call for more conservative policies and priorities.

Purchase Dr. Paulson’s newly released ”Joy Comes with the Morning” course today! Get ready to enjoy the 31 short, recorded messages on your computer or smart phone. Each message is designed to expand and enhance your joy-filled faith experience whenever you need or want it. Visit to start bringing more Christian joy to your morning today. Contact him at [email protected]

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