As George Bailey knew, bank system depends on trustBy Edward
Lotterman If you want to understand how the slow-motion train
wreck called the euro system will play out, revisit the classic
movie “It’s a Wonderful Life.” Remember the run-on-the-bank
scene? Now realize that there seldom is a Jimmy Stewart
character to come in and ease the fears of panicky savers. Also
realize that stopping a bank run on an entire country or
monetary system is enormously more daunting that stopping one on
a single bank or banking system. That said, understanding the
basic psychology of bank runs is where we must start. Banks are
financial intermediaries. They accept deposits from one group of
people and make loans to another group. When you take your money
to a bank, they don’t just lock it up in a safe, as Jimmy
Stewart’s George Bailey character reminded us. And when you get
a loan, the bankers are not lending you their own money. It
necessarily comes from some depositor. Banks then are marvelous
social institutions that move tem