Digitization helped spur spectacular banking failures
Clearly, these are not the same as your grandfather's bank runs. There’s a pivotal scene in the holiday classic film “It’s a Wonderful Life” when panicked depositors at the Bedford Falls Building & Loan swarm en masse to withdraw their funds. Protagonist George Bailey averts a bank run by explaining fundamentals: “You're thinking of this place all wrong, as if I had the money back in a safe. The money's not here. Your money's in Joe's house, right next to yours, and in the Kennedy house, and Mrs. Macklin's house, and a hundred others.” That was then. As the recent rash of bank closures have shown – including the collapse of Silvergate Capital Inc. and Silicon Valley Bank, both of California, followed by that of New York City-based Signature Bank – failures are immediate, with an acceleration largely fueled by digitization. It
Continue reading