True it’s only anecdotal evidence, but I’m pretty sure people search Google about FDIC insurance when they’re worried about their bank going bust.
What you see on this chart is a bank run precursor, the starting gun getting cocked. All someone has to do now is blink and the run is on. Doesn’t matter if it’s a false start or not once a run starts, the outcome becomes inevitable.
Note, there are solutions to this problem, as discussed by Roubini. It starts with the government increasing FDIC insurance immediately (a temporary increase to $250,000 FDIC insurance was signed into law on Friday) and also recapitalizing banks (more than buying bad assets).
- Here’s how the run on Wachovia unfolded: Wachovia faced ‘silent’ bank run; FDIC forced sale. Now that FDIC insurance limits have been raised, fewer people are over the insured limit, which means less shuffling on the margin, but it will still continue for a period of time.
- Grandinite’s Weekend Bank Run Roundup (a bunch of links there).
UPDATE: 2008-10-5: Forbes: Germany announced Sunday that it would guarantee all private bank accounts, joining Ireland and Greece in taking drastic independent action to ward off financial crisis.