Thousands of Latvians lined up at bank counters and ATMs over the weekend in an attempt to withdraw their savings from Swedbank, the country’s largest banking institution.
As rumors of imminent collapse began to build due to the bank’s reported liquidity problems in Estonia and Sweden, Latvians panicked and headed for their cash. This was the scene outside of numerous ATM’s in Latvia’s capital city, Riga:
There are various reasons for why a bank run may occur in the U.S., but the overwhelming driving mechanism will be panic. Once the public realizes that a particular insititution can’t make good on its debt or the country’s currency goes into a death spiral, depositors will be out in droves. ATMs will be limited on cash and generally allow withdrawals of about $300 per day. Likewise, banks will simply not have enough money to pay out the entire account balance of every depositor, so they will more than likely implement withdrawal restrictions similar to what you might get from an ATM.
At that point, the future of your finances will fall into the hands of the federal government by way of the FDIC, which itself is wholly under-capitalized and unable to effectively cover the deposits of a single major U.S. bank, let alone the entire banking system...