A New World Record — Four Financial Crises in 25 Years

Robert Z. Aliber
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Robert Z. Aliber: University of Chicago

Chapter 11 in The New International Money Game, 2011, pp 157-177 from Palgrave Macmillan

Abstract: Abstract A run on a bank — at least in an advanced industrial country — seems like an event out of the Great Depression of the 1930s. Frenetic depositors line up waiting for the bank to open because they want to be among the first to get their money; they anticipate that the bank soon will close because its money holdings will be exhausted. In September 2007, Northern Rock, the largest mortgage lender in Britain, experienced two runs, one in the wholesale commercial paper market and the other in the retail market. Northern Rock borrowed more than 40 million pounds from the Bank of England to avoid bankruptcy and then was taken over by the British Government. About the same time Countrywide Financial, the largest US mortgage lender, also experienced a run in the wholesale money market and received a capital infusion from Bank of America. Subsequently the US Treasury made a large investment in Bank of America to ensure that it had adequate capital.

Keywords: Interest Rate; Real Estate; House Price; Hedge Fund; Loan Loss (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-24672-0_12

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DOI: 10.1057/9780230246720_12

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