This from Britain’s Daily Mail newspaper:
Britain was just three hours away from going bust last year after a secret run on the banks. This wasn’t revealed until Jan 24, 2009 by one of British Prime Minister Gordon Brown’s ministers.
City Minister Paul Myners disclosed that on Friday, October 10, the country was ‘very close’ to a complete banking collapse after ‘major depositors’ attempted to withdraw their money en masse. The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block ATM cash withdrawals.
Only frantic behind-the-scenes efforts averted financial meltdown.
‘There were two or three hours when things felt very bad, nervous and fragile,’ he said. ‘Major depositors were trying to withdraw – and willing to pay penalties for early withdrawal – from a number of large banks.’
The threat to the system was so severe that the Bank of England was forced to contact RBS’s creditors in New York and Tokyo to persuade them not to withdraw their funds, but it is not known which other banks faced a run on their reserves. ‘We faced the very real problem of how banks could stop depositors from withdrawing their money,’ a Treasury source said yesterday.
‘The banks themselves were selling their shareholdings, accelerating the stock-market falls, and preparing to shut up shop. Mortgages would have been sold on and savers would have been spooked, to put it mildly. It would have been chaos.’ [link]
What secrets about the US haven’t yet been revealed? How ’bout this for starters? Market Was 500 Trades Away from Armageddon
I re-read the warning from a financial guy I trust, Martin Weiss: Happy (bank) Holidays! In the Nov 28, 2008 post he said:
Banking Meltdown – Is it Possible?
On October 11, 2008, a single statement hit the international wire services that provides more specific clues:
“Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.”
This statement was not the random rant of a gloom-and-doomer on the fringe of society. Nor was it excerpted from a twentieth century history book about the Great Depression. It was the serious, objective assessment announced at a Washington, D.C. press conference by the Managing Director of the International Monetary Fund (IMF).
The unmistakable implication: So many of the world’s largest banks were so close to bankruptcy, the entire banking system was vulnerable to a massive collapse.
And just because things have been relatively calm for a month I don’t believe for a femtosecond our banks are safe now.