Yea, that would happen. But bank runs were a significantly contributing factor to the Great Depression, which is why that scene had to be put in the movie.
Which brings us to today. Despite the attempts at reassurance by the central banks of both American and European governments that the sub-prime lending crisis is contained, there are many who are not getting the message, and rightfully so. It is NOT contained, and banks are working feverishly behind the scenes to put out this wildfire before it spreads.
The defaults on subprime mortgages and the subsequent defaults on securities that are derived from those shaky, questionable loans, will mean less liquidity for some major institutions in the world. Less liquidity, less cash, and
Thus, today's story has some very ominous overtones:
LONDON (Reuters) - Fears grew on Saturday that panic among savers at British bank Northern Rock will see a run of withdrawals after reports that 1 billion pounds ($2.01 billion) had already been taken out.It will be impossible to even gauge the impact of this run for some days. The fact that people can electronically move their money out means they can't even easily stop the flow or limit it. Northern Rock could go bone dry on Monday, and no one would know until Wednesday.
The Bank of England stepped in on Friday to rescue Northern Rock, Britain's fifth-biggest mortgage provider, pledging to provide emergency funds after a global credit crunch hit the bank's ability to raise cash in money markets.
Saturday's Financial Times said customers had withdrawn 1 billion pounds on Friday, or about 4 percent of deposits.
Citing a source familiar with the situation, the paper said a quarter of that amount was withdrawn from branches and more via the Web site, despite problems accessing online accounts.
And this is after the Bank of England has stepped in to do a George Bailey!
Bank runs have their own unique momentum, fueled by rumour and truth in a volatile mixture. The conservatives have played this paranoia for their own benefit for seven years now, and I suspect we're about to see it blowback big time on them. Just try to stop Americans from withdrawing money, and you'll realize that all those terror rumours and anti-liberal, anti-human, anti-gay, anti-immigrant ghost stories took their toll on our psyches.
This won't be the last bank run, nor will it be the worst. And this depression could be worse than anything we've ever seen.