According to Rep. Paul Kanjorski, D. Pennsylvania, 11th District,in a TV interview, on September 15, 2008, Thursday, late in the morning, an electronic run on the banks began and was noticed by the Federal Reserve. The Federal Reserve was unable to stop it with emergency loans to banks; the run went up to $550 billion in almost two hours. To stop it, the Fed guaranteed depositor accounts up to $250,000; that at least apparently stopped it. Paulson went to Congress and said, if the run had not been stopped, that up to $3 trillion would have been withdrawn by the end of the day and the US banking system would have collapsed. Kanjorski heard him say it. If the banking system had collapsed, the economy and hence the political system would have collapsed (Kanjorski stated, not indicating whether it was his own, or Paulson's, inference from the situation).
Who was making an electronic run on the banks? To say that a $250k guarantee stopped the run, implies that the run was by small depositors and not large depositors and, probably, not foreign depositors. Was that the case? Or was the run some other kind of financial transaction rather than withdrawal of cash from accounts? The Fed knows. The Treasurery knows. The Bush and Obama administrations know. Congress knows. But we don't know. Why don't we know?
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