Inside Wachovia, executives started noticing customers withdrawing money on Friday morning, following the failure of Washington Mutual on Thursday. “The so-called silent run on the bank – it's real,” Carlos Evans, Wachovia's wholesale banking executive, said in an interview. “When Congress failed to pass the ($700 billion bailout) proposal, when WaMu collapsed, you could see the money flowing. My computer screen was lighting up.”
Starting Friday morning, Evans said, businesses and institutions with large accounts started withdrawing money to lower their balances to below the federally insured $100,000 limit. They weren't closing accounts, he said, adding “they were very apologetic in saying they love the service they get from Wachovia and they weren't leaving Wachovia. They were just moving their money until things settled down.”
Money flowed out of Wachovia throughout the weekend, said Evans who heard anecdotes and received memos and BlackBerry messages from bank employees in the field.
“What happened last week, and it literally happened that fast …You could go from being OK, hurt, weakened, there's no question the company was weakened… but you go from being weakened to in trouble in a matter of days,” he said. “I don't think people understand how quickly events unfolded.”
The FDIC and the OCC declined to comment on whether the bank experienced a run on deposits. However, FDIC spokesman David Barr said it wouldn't be surprising. “When a bank in the news is rumored to be in trouble that does prompt a lot of depositors to take a second look at their deposits,” he said.
Wachovia had $448 billion in deposits at the end of June. Spokeswoman Christy Phillips-Brown said the bank updates the number only as part of quarterly earnings reports but added: “Depositors should have full confidence in Wachovia.” In announcing the Citi transaction Monday, FDIC chairwoman Sheila Bair said Wachovia customers had “full protection of all of their deposits.”
source: http://www.charlotteobserver.com/business/story/226799.html
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