Richard Burr is Trying to Start Bank Runs
Via Chris Orr, some irresponsible talk from Senator Richard Burr, who really ought to know better:
During a speech on the economy last night, [Sen. Richard] Burr related his immediate reaction the week the crisis began.
“On Friday night, I called my wife and I said, ‘Brooke, I am not coming home this weekend. I will call you on Monday. Tonight, I want you to go to the ATM machine, and I want you to draw out everything it will let you take,” Burr said, according to the Hendersonville Times-News. “And I want you to tomorrow, and I want you to go Sunday.’ I was convinced on Friday night that if you put a plastic card in an ATM machine the last thing you were going to get was cash.”
Thanks to deposit insurance, there’s no actual need for people to be worried. But Senator Burr’s effort to whip people into a panic could lead to runs and bank failures. That, in turn, will lead to people losing jobs. People could even lose their business through no fault of their own other than having customers who chose to take the words of a United States Senator seriously. I’m having a hard to imagining what Burr could have been thinking.
48 Responses to “Richard Burr is Trying to Start Bank Runs”
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April 14th, 2009 at 6:00 pm
I’m just going to say what we’re all thinking: the GOP is a party of serious policy-makers with a valued seat at the table of our greater national discourse.
April 14th, 2009 at 6:00 pm
Hey, that sounds EXACTLY like what Chuckie Cheese Schumer did with IndyMac.
Except that Schumer actually did cause IndyMac to collapse.
April 14th, 2009 at 6:02 pm
Hey, and regarding Chuck Schumer’s causing IndyMac to collapse by his loose talk which caused a run on the bank, I’m just going to say what we’re all thinking: the Democrats are a party of serious policy-makers with a valued seat at the table of our greater national discourse.
April 14th, 2009 at 6:04 pm
I’m also curious how Burr’s recollection now about what he did 6 months ago can be construed as an “effort to whip people into a panic”.
Of course, it can’t. It’s just more partisan nonsense from Matthew.
April 14th, 2009 at 6:04 pm
Except that Indy Mac was already insolvent and would have had to confess to that fact a lot earlier if its captive regulators had not allowed it to deceive its auditors and kept it going so it could lose even more money for more people. Chuck Schumer has a lot to repent for IMHO, but Indy Mac isn’t one of his sins.
April 14th, 2009 at 6:07 pm
Whoah, Al! WHOAH!
As an ardent progressive, I can’t tell you how offended I am that you’ve taken a shot at noted prairie populist, part-time rancher and democratic socialist Chuck Schumer.
When I think about speaking truth to power, I see Schumer’s gleaming brow bearing down on all of those Washington BigWigs! When I think of politicians who said, “You know what? Keep your campaign contributions, Wall St! I’m taking your asses to COUNTY!” I think of Schumer.
Schumer!
April 14th, 2009 at 6:08 pm
The crisis began on September 7th, 2008 with Fannie/Freddie. This was a Sunday. Similarly, Lehman’s bankruptcy was announced on a Sunday causing the ensuing market chaos early in the week. This leaves us with a few options:
1. Burr had inside information and was trying to benefit from his position as a Congressman on Friday September 5th.
2. Burr had no clue how bad the problem was until Paulson introduced TARP and communicated its urgency on Sept 19, a Friday. In which case Burr was frighteningly behind the ball for someone who should be in the know. According to the Times, discussions actually began the day before.
3. Burr’s lying, and knows that his anecdote makes no sense unless his panic ensued on a Friday evening after banks closed and before the weekend delay.
April 14th, 2009 at 6:11 pm
Either Matt’s comprehension skills are really bad, or he thinks that those listening to Burr’s speech have really bad comprehension skills, or, perhaps Matt believes that those listening have time travel machines and can go back to last fall and pull their money out of the banks.
April 14th, 2009 at 6:11 pm
It should be pointed out that North Carolina is headquarters to lots of large banks, so its somewhat surprising to see Burr taking this line.
April 14th, 2009 at 6:12 pm
Ah, Hendersonville: Carolina Bircher country.
April 14th, 2009 at 6:13 pm
Congratulations, Al. You’ve successfully shown that this post should have been titled “Richard Burr Was Trying to Start Bank Runs.” That changes everything.
April 14th, 2009 at 6:14 pm
The crisis began on September 7th, 2008 with Fannie/Freddie. This was a Sunday. Similarly, Lehman’s bankruptcy was announced on a Sunday causing the ensuing market chaos early in the week. This leaves us with a few options:
1. Burr had inside information and was trying to benefit from his position as a Congressman on Friday September 5th.
The Fannie/Freddie takeover was reported in USA Today on Friday September 5th.
So maybe by “had inside information” you actually mean “read USA Today”?
April 14th, 2009 at 6:15 pm
You’ve successfully shown that this post should have been titled “Richard Burr Was Trying to Start Bank Runs.”
No, it would have to be, “Richard Burr Was Trying to Start Bank Runs by people who own time machines“.
April 14th, 2009 at 6:20 pm
Thanks to deposit insurance, there’s no actual need for people to be worried.
You understand how deposit insurance works right? It means you will get your cash *eventually* (and normally after just a few business days and frequently less). But for a few days, depending on the nature of the bank failure, it potentially is possible not to able to get access to your account while everything works itself out. (during the last two years, because most of the time FDIC has found a buyer in a secret auction prior to the action, the transition has in fact been seemless. But there’s no guarantee. Esp if everything were to go insolvent at once)
You have seen than even in the smoothest FDIC takeovers, there’s generally long lines, right?
2. Burr had no clue how bad the problem was until Paulson introduced TARP and communicated its urgency on Sept 19, a Friday. In which case Burr was frighteningly behind the ball for someone who should be in the know. According to the Times, discussions actually began the day before.
Is/Was Burr on the appropriate committee? I honestly don’t know. If he wasn’t, then he’s just as likely to have found out on Fri.
I’m another one who doesn’t see how retelling events from 6 months ago is supposed to instill widespread panic, anymore than retelling what you did on 9/11 spreads the fear of a terrorist attack (that is – it does raise the ’state of fear’, but only in an oblique manner)
April 14th, 2009 at 6:24 pm
@Al
Aha! I only found Sunday 9/7 announcements but I suppose it was in the press unofficially before that. That changes everything!
April 14th, 2009 at 6:26 pm
The whole reason why the Sep TARP plan was sold as something that needed to be done ‘right now’ (vice say after the election) was that the supporters were saying that without it, the banking system would in fact grind to a halt. I still believe this is right. IIRC, so did MattY. Have you changed your mind?
April 14th, 2009 at 6:32 pm
Burr is yet another hopelessly obscure Republican senator who got there…well, I’m not sure how, exactly.
April 14th, 2009 at 6:34 pm
To be accurate FDIC deposit insurance does not have the funds to insure anything. Well a tiny few billions of the 6 trillion or so bank deposits. It is the illusion of the insurance which prevents bank runs. I am not decrying this, just saying.
Bank deposit insurance is just one of the myriad of abstractions upon which the system is built. All of them con games, confidence games. It goes without saying that the biggest winners in con games are con men who know the score, know it is just a game, and play accordingly. I am not talking about Madoff. I am talking about the Titans of finance in and of the giant banks and financial corporations.
If you find yourself hearing one of them saying they are seeking what is best for the masses, and believing it, I suggest a dose of LSD because obviously your so far gone into our manufactured reality that a radical cure is necessary.
April 14th, 2009 at 6:38 pm
What I find odd about this story is that he allegedly wanted her to take the money out with her atm card. Nearly all banks impose incredibly low ATM limits ($300 is common) for a single day’s transactions. Govtrack has Burr’s net worth as between $500k and $1.5MM. How, exactly, is taking $900 out going to put a dent in that?
April 14th, 2009 at 6:46 pm
I was wrong above; you were a crisis skeptic. for example here: http://yglesias.thinkprogress.org/archives/2008/09/how_critical_is_the_crisis.php
I mistakenly thought you were one of the ones that got on the bandwagon to put the onus on the House Republicans when they wre blamed/credited for stopping the first version of TARP.
I still disagree with your assessment of the magitude of the Sept crisis, and the consequences of no action, but give due credit for consistency.
How, exactly, is taking $900 out going to put a dent in that?
If you just want to be sure you have enough cash on hand for a week or so if during that period, your atm or credit card wouldn’t be accepted, it would be sufficient and appropriate.
April 14th, 2009 at 6:49 pm
You all do understand that he’s trying to defend his TARP votes against *conservative* opposition to them, right? And so is speaking to what he thought of the state of things at the time.
April 14th, 2009 at 6:52 pm
Re “Thanks to deposit insurance, there’s no actual need for people to be worried.”
————–
ha ha ha. Good one.
So what is the size of banking deposits insured by the FDIC?
And how much money does FDIC have to cover that insurance?
April 14th, 2009 at 7:08 pm
This blog has devolved into snarky smart ass comments and stupid “gotcha” ramblings by the same clueless idiots who have absolutely nothing to add to any discourse. I rather enjoy reading Matt Yglesias personally, but this blog is a mess. Deleted from the bookmarks.
April 14th, 2009 at 7:08 pm
Dude I was totally having a hard to imagining what he was trying to do too.
April 14th, 2009 at 7:14 pm
The Senator said that we are not in a recession, but a depression because “A recession by definition is when you raise interest rates to slow growth.”
Here are his committee assignments:
April 14th, 2009 at 7:16 pm
Sorry – here are the Senator’s committee assignments” –
/www.sourcewatch.org/index.php?title=Richard_Burr#Committees_and_Affiliations
April 14th, 2009 at 7:34 pm
Gawd, this a-hole was prolly really fun to be with before Y2K.
April 14th, 2009 at 7:36 pm
Why are there so many rightwingers on here? I don’t get it. I guess I could understand it if Matt was popping up as the liberal-go-to-TV-pundit everyday (God knows I’ve fired off a few abusive emails to Jonah Goldberg), but he’s not.
April 14th, 2009 at 7:47 pm
why didn’t he tell his wife to go inside the bank and make a teller withdrawal?
April 14th, 2009 at 7:53 pm
When did Automatic Teller Machines become Automatic Teller Machine Machines?
April 14th, 2009 at 7:54 pm
2. Burr had no clue how bad the problem was until Paulson introduced TARP and communicated its urgency on Sept 19, a Friday. In which case Burr was frighteningly behind the ball for someone who should be in the know. According to the Times, discussions actually began the day before.
April 14th, 2009 at 8:54 pm
“A recession by definition is when you raise interest rates to slow growth.”
I can’t take it anymore. These illiterate, stupid, scumbags, are the people who are theoretically defending capitalism against….whatever the hell they think is going on.
April 14th, 2009 at 9:00 pm
Why are there so many rightwingers on here?
Slapping MattY down for sloppy thinking (or the sloppy expression of sound thinking) is a bipartisan pastime.
Personally, I only throw my hat in the ring when he goes into obvious CAP-forces-me-to-write-this-sort-of-stuff mode.
April 14th, 2009 at 9:33 pm
ATM machine? Ok Grandpa Simpson.
And then he reminded his wife to make sure the bunker was stocked with all the necessary supplies: a SCUBA apparatus, some good DVD discs, and a GPS system.
April 14th, 2009 at 10:56 pm
Somewhat related tangent: Republican Paul Ryan of WI was a consistent supporter of the policies that created this mess:
http://www.thedailypage.com/isthmus/article.php?article=25615
I am not a fan of one party governance, but man the Republicans are terrible. Why can’t America have a respectable conservative party and not a room full of hacks and morons?
April 14th, 2009 at 10:56 pm
I’m a fan of Yglesias, but this post substitutes partisan snark for reasoned consideration of what Burr’s comments tell us.
I’m a leftwing democrat who is worried that Obama is being too kind to the big banks, but I must say that I was reading the financial blogs intently from March through December of 2008 and I was having thoughts similar to Sen. Burr’s at that time. The problem, as I saw it, was not the FDIC guarantee but more the mechanics of how credit operates. As the crisis deepened over the summer, the metaphor was how the credit markets were “freezing up”. The term being used was “systemic.” Mastercard and Visa and American Express were all on the same borrow from Peter to pay Paul treadmill. And it looked like Peter might have had a heart attack and wouldn’t be around on Monday. The fear was that you would take your card to your ATM or present it at Whole Foods and you’d get a polite little message on the order of “unable to perform this operation at this time.” The fear wasn’t that the bank wouldn’t be there on Monday, the fear was that the mechanism for getting cash/credit would collapse.
I don’t have the financial expertise or the knowledge to know how real the risk was. But what I think Burr’s comments show is that is how the Bush administration presented the options for the bailout. Either, you vote for this or your constituents are going to be in the checkout line at Kroger on Saturday and their credit cards won’t work.
The question (as the Bush administration presented it) was not whether the FDIC guarantees were sound, but whether the country was capable of going from a credit economy to a cash economy overnight. If we were on the verge of becoming a cash economy, then it was only prudent to accumulate as much cash as possible to buy groceries and fuel the minivan.
As far as I know, we really don’t know what the Bush Administration told congress in September. Whatever it was, Congress was reallly rattled. The Democrats, in the middle of a heated partisan national campaign, voted overwhelmingly to support a Bush administration intiative.
Burr may be clueless, but his remarks are a glimpse of what went on behind the Wizard of Oz’s curtain. If they accurately reflect what the Bush administration was telling congress, then they revealing of what was actually going on in September 2008.
April 14th, 2009 at 11:00 pm
I think this is the desperate act of a Senator fading in the polls, who then calls on Rove for some twisted scheme.
Since he won’t get any Democratic votes, and very few Independent votes, his only hope is to bring out the rabid base. Expect to see lots of fear-mongering inolving guns, gays, abortions, bail-outs, bank failures, unions, Mexicans… all choice cuts of red meat.
April 15th, 2009 at 12:00 am
This doesn’t involve time machines.
Deposit insurance is there to prevent bank runs. But it won’t prevent any runs if people decide that it won’t really be there if their bank folds. The simplest reading of the Senator’s comments is that he doesn’t think deposit insurance will be there. If that influences people that will be bad. It won’t cause any bank runs in 2008, but it will cause them eventually.
In fact, Burr probably was just worried that he might not have any cash on hand while the FDIC sorted things out. He ought to have made himself clearer though.
April 15th, 2009 at 5:07 am
As a resident of the great, now BLUE, state of North Carolina I would like to apologize for this shameful jackass(Sen. Burr). One might wish that he would use his, hopefully short, remaining time in government service to do something useful. Like, maybe, take a vacation, to New Jersey; and while there shoot the Treasury Secretary. In lieu of that, I, and many others here, will be doing our best get someone who actually believes in government to represent us in the US Senate.
April 15th, 2009 at 7:54 am
The troglodyte Senators McCain and Shelby called for the big banks to be closed, allowed to fail, just before their stocks started rises of 100-300%. The market knows that these guys are just clowns.
April 15th, 2009 at 8:23 am
I’m not sure a Senator should be talking about this too much, but as some other people are suggesting above, there is no way the FDIC could quickly supply the necessary liquidity in the event of a massive bank run. So assuming you did eventually get back your money, it could take an unusually long time for that to happen.
And I take it Burr’s point was that we really did need to act swiftly to try to prevent that if at all possible. Which I believe is a perfectly valid point, again with the caveat that it may indeed not be a great idea for a Senator to be dwelling on the practical limits of the FDIC deposit insurance regime.
April 15th, 2009 at 9:05 am
Burr’s point was that we really did need to act swiftly to try to prevent [a situation where the FDIC can't pay off depositors in failed banks] if at all possible.
I agree with the above-quoted statement and I’d really like to believe this was the case. However, given that I’ve heard nothing but bottom-feeding paranoid demagoguery from any Republican politician from the last ten years, I’m going to assume that was Senator Burr’s intent as well.
April 15th, 2009 at 10:46 am
“Richard Burr Was Trying to Start Bank Runs by people who own time machines“.
Fun fact: the first big ATM network in Milwaukee was named Take Your Money Everywhere. If this had been Herb Kohl, the bank run might have worked because his constituents do use TYME machines.
April 15th, 2009 at 10:50 am
“I’m having a hard to imagining what Burr could have been thinking.”
How could ASSUME that the Senator was capable of ‘thinking’? It’s evident to me that ‘thinking’ Senators in the Republican party is a lost art.
April 15th, 2009 at 1:48 pm
Mary is right on. How could anyone think a Republican Senator or Congressperson would spout anything other than rightwing blather. Too many of them are under the thumb of El Rushbo and his fascist talk radio cronies.
April 15th, 2009 at 1:58 pm
“Thanks to deposit insurance, there’s no actual need for people to be worried. But Senator Burr’s effort to whip people into a panic could lead to runs and bank failures.” Matthew, you can’t have it both ways. Either FDIC makes us safe from bank runs, or it doesn’t. Which is it? Since FDIC has only $1 in reserves for every $250 in deposits, I’d say it does not.
April 15th, 2009 at 2:08 pm
Geez, I read all your posts. What it means to me is that most of you are far left or far right. What ever happened to following our Constitution? Keep typing and shift the blame at the opposite party, but it is you the voters refusing to stand up for our Constitution that are to blame. Want a solution? Refuse to vote for anyone that won’t uphold our Constitution.
April 15th, 2009 at 11:22 pm
“I’m having a hard time imagining what Burr could have been thinking.”
The phrases “Republican Senator” and “thinking” should not be in the same sentence, with the former the subject and the latter its verb, at any rate, unless you have a negative in there somewhere between the two. I’m having a hard time imagining that Burr could be thinking anything more complicated than mulling what to have for dinner.