'The money market bank run that maybe wasn't'

[Eric J in MN]

About a video of Rep. Paul Kanjorski (D-PA), from Andrew Leonard's blog "How the World Works at salon.com:

On Tuesday, I posted the now-notorious Kanjorski video, in which the Democratic congressman from Pennsylvania made some rather alarming statements about a supposed money market bank run last September. I probably should have been more skeptical than simply noting that the numbers quoted by Kanjorski didn't jibe with what the New York Times had contemporaneously reported.

Felix Salmon took a more careful look on Wednesday and concludes "that there never was a $500 billion outflow from any asset class in the space of a couple of hours or even weeks, and the Fed never shut down or froze any money-market accounts."

On Thursday, Politico's Ben Smith, from whose blog I had originally learned of the video, added "a fairly serious note of doubt" when he asked Kanjorski's spokeswoman for the source of the congressman's allegations, but received only a pointer to an anonymously sourced New York Post article, "Almost Armageddon."

After spending quite a few hours watching U.S. senators and representatives in action this week, I should know better than to assume that anything they say has much of a relationship with reality, but one does die a little, inside, when one realizes that the chairman of the House Capital Markets Subcommittee has, at best, a slender grasp of recent financial market history.

[MrPerson]

1. And I got flamed last week for casting doubt on this.

[Name removed]

2. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[MrPerson]

11. Can someone IM me and tell me what got said to me?

I feel so cheated.

[elleng]

3. So do we believe 'felix salmon' and ben smith,

or Mr. Kanjorski? I think we need a bit more than this.

[Eric J in MN]

5. The Treasury Dept didn't shut down money market accounts,

...they guaranteed them on a temporary basis.

This statement by Rep. Paul Kanjorski (D-PA) isn't true:
"The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts..."

http://www.nytimes.com/2008/09/20/business/20moneys.html?_r=1

[elleng]

6. Interesting.

Thanks

[elleng]

4. delete

.

[kentuck]

7. I thought the Congressman said there was a "planned" run on the bank...

Not that there was a run on the banks. It didn't happen. We knew that. But why didn't it happen? It took them about two weeks to get the $700 billion approved.

[Eric J in MN]

8. Rep. Paul Kanjorski said...

"We were having an electronic run on the banks. They decided to close the operation, close down the money accounts..."

Treasury didn't close down money market accounts. It temporarily guaranteed them.

[Historic NY]

9. So what happened to the billions the FED pumped in?

[slipslidingaway]

10. kick for later n/t