What An Online Bank Run Looks Like

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TechDirt.com author Mike Masnick, who is obviously unaware of the Countrywide bank run, writes about how the Northern Rock bank run has played out online:

In the bad old days (or in countries with questionable financial situations) when there were concerns a bank might run out of money, there would be an old-fashioned “bank run,” with tons of customers all trying to withdraw their money at once. That could cause all sorts of problems, since most banks work on the theory that such runs won’t happen. Thanks to the FDIC, you don’t see bank runs in the US these days, but apparently that’s not the case in the UK, where concerns over the financial status of the bank Northern Rock led to what certainly looks like an old-fashioned bank run. However, in this modern age, not everyone is lining up on the street to get into their nearest Northern Rock branch. Apparently, the bank’s website has experienced the equivalent of a bank run on its servers — meaning that they’ve been pretty much unable to handle the traffic, frustrating a number of online account holders who say the terms of service say the only way they can retrieve money is via the online interface. Of course, the fact that many of those account holders can’t even reach the site is leading to increased panic among those who fear that the site is down permanently. Apparently, even if the interface is different, an online bank run pretty much mimics the offline one.

Christopher Null of Yahoo! Tech writes:

Northern Rock says everything is fine, that your money is safe, and that the web difficulties are a mere technical hiccup. That isn’t sitting well with people who have followed Northern Rock’s provisions regarding account access for years, only to face an impossible task while trying to get to their funds when the chips are down.

We’re currently minutes away from hearing if the Fed will put off the inevitable economic crisis by increasing inflation.

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