Bank%20Run%20Risk%20In%20The%20Shadows - Wall Street...

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Wall Street Journal THE OUTLOOK DECEMBER 5, 2011 Bank-Run Risk in the Shadows by Kelly Evans Bank runs aren't a relic of the 20th century. In fact, they risk becoming a hallmark of the 21st—though with a twist. The 2008 financial crisis displayed characteristics of a classic bank run, but people holding bank accounts weren't the ones scrambling to get their cash. It was lenders demanding their money from other financial institutions. Indeed, today's panics are more likely to involve major financial institutions and are largely hidden from plain sight until they are severe enough to trigger plunging stock prices, bankruptcies, layoffs and rising unemployment. And the current European crisis is a reminder that some of the vulnerabilities exposed in 2008 still exist. These panics often originate in the shadows of the banking system, where major financial institutions do business with one another. To say it isn't well understood would be an understatement; the Financial Stability Board, which works on behalf of G-20 countries for financial reform, has formed a task force to clarify what is meant by "shadow banking" in order to monitor and identify potential ways of regulating it. The FSB's working definition of shadow banking is "credit intermediation involving entities and activities
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Bank%20Run%20Risk%20In%20The%20Shadows - Wall Street...

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