Warning: "Silent" Run on Banks.

[palintology]

Very interesting radio interview ...

http://www.rgemonitor.com/blog/roubini/253818/roubini_sees_silent_run_on_banks_urges_triage_bloomberg_radio_interview

Nouriel Roubini elaborates on the rising risk of the "mother of all bank runs", i.e. the risk of a run on the uninsured deposits in the US banking system. In Q2 of 2008 the FDIC reports $4462bn insured domestic deposits out of $7036bn total domestic deposits; thus, only 63% of domestic deposits are insured. Thus $ 2574bn of deposits are not insured.

Given the risk that many banks – small, regional and national – may go bust (as even large ones such as WaMu and Wachovia went recently bust) there is now a silent run on parts of the banking system. Deposit insurance formally covers only deposits up to $100000. Thus any individual, small or large business and/or foreign investor or financial institution with more than $100000 in a FDIC insured bank is now legitimately concerned about the safety of its deposits.

Particularly at risk are the cross border short term interbank lines of US banks with their foreign counterparties that are estimated to be close to $1 trillion. I will also discuss later today the appropriate emergency policy responses necessary to prevent this "mother of all bank runs" (i.e. the need for a temporary blanket guarantee on all US deposits combined with a rapid triage between insolvent banks that should be quickly closed and distressed but solvent – conditional on liquidity and capital injections – banks that should be rescued).

[Uben]

1. I started a run on my bank

Well, I tried, but they were out of nickels.

[Dover]

3. Silent Running

http://en.wikipedia.org/wiki/Silent_Running

[Dover]

2. Either CDARS are the best kept secret or there is a catch...

but generally speaking it is a vehicle for depositors/Savings to get funds up to $50 Million
FDIC insured by banks sharing the risk (like a cooperative).

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x40915

[Sulawesi]

4. misleading, there is movement out of unisured assets into insured ones.

This is sensible. You should be in real equities (stocks, bonds) or federally insured cahs. It is not as if people are filling their mattresses with 2.5 trillion greenbacks.

[gopbuster]

5. Roubini has been on the mark with this....

Here is a video interview with him back in July

Roubini: More Than $1 Trillion Needed to Solve Housing Crisis
http://finance.yahoo.com/tech-ticker/article/41423/Roubini-More-Than-1-Trillion-Needed-to-Solve-Housing-Crisis?tickers=FNM,FRE,XLF,WM,WB,WFC,BAC

Very interesting, he explains exactly what happened i.e. the series of events

Nouriel Roubini: The Shadow Banking System Is Unravelling

http://www.ft.com/cms/s/0/622acc9e-87f1-11dd-b114-0000779fd18c.html?nclick_check=1

He started calling this as far back as 2006

http://asianenergy.blogspot.com/2008/09/nouriel-roubini-shadow-banking-system.html

On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.