No Quick Or Easy End To This Banking Crisis

Banking crises are notorious for starting small and looking isolated. At first, the Federal Reserve and the FDIC jump into action, using monetary resources to counter the “systematic” risk of widespread depositor withdrawals occurring elsewhere.

Unfortunately, though, those first few banks are rarely the main show. Instead, they are the forerunners – the ones at the leading edge of some risky growth strategy that has blown up. As the Fed, FDIC and Wall Street dig into those initial banks’ actions, an overriding fad or flaw usually emerges.