AprioriTrader: >> The electronic $550 Billion run on the US Banks

Rep. Paul Kanjorski of Pennsylvania is the chair of the subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. The subcommittee reviews laws and programs related to the U.S. capital markets, the securities industry, the insurance industry generally (except for health care), and government-sponsored enterprises.

He was on C-SPAN's Washington Journal on January 27th, and explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two.

Its debatable whether this electronic money market run nearly destroyed the US Economy, as is claimed by various articles on the internet. However its worth listening to what he exactly had to say.

Here is a brief transcript of what Kanjorski says (I am paraphrasing to an extent here):

"On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two.

Money was being removed electronically. The treasury tried to help with $150 Billion. But could not stem the tide. It was an electronic run on the banks

The treasury intervened but had they not closed down the accounts they estimated that by 2 PM that afternoon. Within 3 hours $5.5 Trillion would have been withdrawn and within 24 hours the world economy would have collapsed."