The Reverse Bank Run

Forbes reports:

More proof we're not in another Great Depression: The people storming teller windows at teetering banks these days are clamoring to put money in, not take it out.

In a curious twist to the traditional bank run, Americans seeking high yields on their money are causing deposits at struggling banks to mount in seeming lockstep with their troubles. The result is that banks that should fail are sticking around longer, making the cleanup when they do fail more costly. Banks taken over by the FDIC recently have saddled the agency with losses equal to a third of seized assets, double the level in the last banking crisis in the early 1990s, according to law firm Jones Day.

At Silverton Bank of Atlanta, the worse the news got about its bum construction loans, the more the money poured in. Before it was seized in May its so-called brokered deposits--money pooled from rich folks then shopped around for high rates--stood at $1.4 billion, quadruple the level nine months earlier.

At another reckless lender, First Bank of Beverly Hills, brokered deposits nearly doubled in the year before it collapsed in April. Ditto for another recent wipeout, First Bank of Idaho. One of this recession's biggest failures, BankUnited of Florida, managed to triple its brokered deposits in just 1.5 months last year, though that money ebbed before it was seized.

Great moments in TARP! Anyway, this is socialism at it's finest: the survival of the unfittest.