We’re all familiar with the so-called “run on the bank.” It usually begins quietly with just a few depositors getting nervous about the solvency of the bank.
They line up to get their cash out before the bank closes its doors. Soon the word spreads and the line gets longer. The bank projects an air of confidence and gives cash to depositors who request it as long as they can, but pretty soon the cash runs out.
The classic image of this is the scene from the Christmas-season film It’s a Wonderful Life, with Jimmy Stewart. We’ve all seen it. Now something similar is happening at the Federal Reserve Bank of New York.