Filed under: Scandals, Bear Stearns Cos (BSC)
As Portfolio.com so eloquently stated, President Bush has “Lyndon Johnson’s war and now Herbert Hoover’s bank runs. Other than that, it’s going well.”
With the high-profile collapse of The Bear Stearns Companies Inc. (NYSE: BSC) and questions surrounding the liquidity of other banks, some, like Jim Cramer, are urging people to relax and not rush to withdraw money from bank and brokerage accounts. This is reasonable: deposits that aren’t unusually large are fully insured and there’s really no reason to worry.
In today’s Wall Street Journal, James B. Stewart writes (subscription required) that “before anyone panics and starts another run on a big bank, let me say unequivocally that client assets in the big brokerage firms are safe from the danger of any Bear Stearns-type collapse.”
Stewart’s right. But here’s the thing: if your account with E Trade Financial Corporation (NASDAQ: ETFC) or another scandal-plagued financial services firm is giving you sleepless nights, switch! There’s just no reason not to — the different banks are all reasonably competitive and moving money around is pretty easy.
I know: if everyone does that, it will cause a run on the bank. But not everyone will, and if moving money will ease your nerves, go for it.
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