Yesterday’s earnings reports from Wells Fargo and JPM confirmed: Americans who have been pulling their cash out of shakey institutions aren’t running to the mattress or rushing to call that guy advertising on CNBC with the gold coins. They’re putting their money in other banks. That has to be a relief.
Today The Journal looks at the trend some more. And it’s not just the big banks, but local ones who have reassured their depositors, benefitting from the trend.
Hudson City Bancorp Inc. of Paramus, N.J., has added $200 million of deposits so far this month, said Ronald Hermance Jr., the bank’s chairman, president and chief executive. Hudson City stuck to traditional mortgages during the housing boom, and the bank has lured more than $2 billion of new deposits this year, including $570 million in the third quarter.
On Wednesday, Hudson City rushed out its quarterly results, including a 64% profit surge from a year earlier to $121.9 million, in order to “show my owners, my customers, my employees that we had a great quarter,” Mr. Hermance said in an interview.
It sounds like they had better luck than when Morgan Stanley pre-announced their earnings a few weeks ago, to reassure their base…. but that’s an aside.
Managers at shaky banks clearly hope the issue of these silent “walks on the bank” are done with, now that the FDIC has stepped up its deposit insurance. But even under the old regime, every banker has been “made whole” (to use an overused phrase). And people still switch banks anyway. Basically, if you think your bank might fail, it’s a lot easier to just take out the cash, walk down the block and deposit it, than to wait and be one of those guys on TV standing in line at the bank when it fails.