No “Run on the Banks?” Define, “Run”

It’s true that depositors haven’t raced to withdraw their money from the nation’s — indeed, the world’s — largest, so-called “money-center” banks the last 18 months or so (basically, the ones considered “too-big-to-fail”). That’s largely a credit, literally, to deposit insurance — administered in the U.S. by the FDIC.

However, that doesn’t mean there hasn’t been a run . . . in the world’s stock markets, by (and on) their shareholders.

In a devastating post, “Bank Market Caps, Then & Now,” financial blog The Big Picture graphically depicts the collapse in value of the world’s 18 largest banks since the second quarter of 2007. The list includes not only such storied names as Citigroup and Bank of America, but the “Citigroup’s” and “Bank of America’s” of the U.K, Germany, France, and Spain — international entities such as HSBC, Santander, BNP Paribas, and Credit Suisse.

To date, the average drop in value exceeds 80%. And that excludes the fate that befell shareholders at AIG, Fannie Mae, Freddie Mac, Bear Stearns, Lehman Bros., etc., whose drops ranged from 95% to 99%-plus.

All this is against the backdrop of an historic stock market rout, and increasing speculation that the new Obama administration is close to embracing the “Swedish model,” or temporary nationalization, to deal with the ongoing financial crisis.

Until now, the U.S. has been focused on preserving some semblance of private ownership through the various, tortured iterations of bank bailouts, debt guaranties, TARP, etc.

Judging by the leading banks’ rapidly shriveling market cap’s, the equity markets clearly anticipate full-blown nationalization . . . soon.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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