a HUGE banking crisis?????
Right now I am talking to more and more people who are taking money out of their local banks. A number are drawing down deposits to get to below the $100K FDIC limits.
After talking to a few bankers and business people, it appears that the majority of dollars in US banks, especially business deposits, are actually above the $100K limit. Really, the only place for these people and businesses to go is put deposits in many many different banks or buy treasuries. Buying treasuries is by far the simpler route to go.
As more and more people continue withdrawing money out of banks, the bank reserves are going to dwindle making our banks very vulnerable.
It is clear that this process is already underway. People like Denninger are warning people to take action before its too late. I have already read a number of articles on the subject. Stories like IndyMac are only going to get the average person to do the same.
Now the question is how far are we into the process and how far will it go? How will our banks deal with a river of deposits flowing out their doors? Citi reports tomorrow morning....it could be interesting.