Banking in America - 2009

We have been told that this is the worst economy since the great depression.  So should we run for the banks and hide our money under a mattress?  Let me offer some insight.  Now, I am no financial guru as anyone in the "know" could clearly observe, but I can offer the following.  During the great depression the citizens of the United States ran to their banks to pull money out, then watched as 9000 banks went under.  FAILED.  

Fastforward 2009.  We now have a back up system which is the FDIC,  rightly or wrongly, that guarantees that our funds will be available.  This means that when confidence wains, and folks run to get their cash (ala' the run on George Bailey's bank in "It's a Wonderful Life") it is always available long enough to calm fears, and allow folks to get the cash back in the bank.  So far in 2009, under this "crisis" we have lost a grand total of 52 banks.  If we add 2008 totals to that we get a whopping 57 banks.  In fact, if we go all the way back to 2000 we get a total of less than 80 banks that have failed on us.  (see 'em all here)  Now, the banks on the brink right now are admittedly big, big, BIG banks.  But I have to wonder, why don't we simply let them go?  Won't we be better off?  We have over 6,000 banks in the US that are opting out of the government guarantees.  Why?  Because there are thousands of profitable banks that are realizing the cost of this money is too great.  

My suspicion is that hundreds of banks will realize soon enough that this program is going to lead them exactly the same place that CRA led Fannie Mae and Freddie Mac.  Insolvency.  Stick with community banks.  They seem to know how to make it work.  Welcome the old axiom:  "They'll only lend money to people who don't need it?"  The people who "don't need it" are also the people with a proven propensity to create and sustain jobs for the rest of us.