We're always told not to worry about our bank failing because our deposits are insured up to $100,000 by the FDIC. Well, in case you were wondering what happens when a bank actually does fail, look no further than the great state of California, where IndyMac has been taken over by federal regulators and its customers are getting a taste of all the FDIC has to offer.
I'm not suggesting the government cover uninsured deposits. I'm suggesting it treat its customers with respect.
This is more than a matter of inept customer service. Images of anxious depositors unable to get access to their money are powerful, and scary; they cause even more financial anxiety. The FDIC is responsible for those images, and that anxiety, because the FDIC is keeping these people waiting in line. In Santa Monica this morning, about 15 people, many of them elderly, were waiting on the sidewalk outside an IndyMac branch. I asked a security guard why he couldn't just invite them inside the bank. He said the bank's air conditioning system could not handle the crowd. I suggest the FDIC dip into its $50-billion fund, drive over to Home Depot, and buy some fans.
I know of children in Los Angeles who run lemonade stands that have better business sense than the FDIC has displayed this week.
The FDIC has 4,500 employees. It needs to put a few hundred of them on airplanes today to come to California and run this bank. Invite the customers inside, turn up the air conditioning and keep the branches open around the clock until there are no more lines. That's right, invite your customers in off the street. Pretend for a moment that you care about them.
Do not tell them to go to your website. Do not tell them, as the president did yesterday, to "take a deep breath." They are not behaving irrationally. Theirs is a rational response to government incompetence. It's their money and they want it. Greet them politely, ask them what they want, and give it to them.
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