At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two. Its enough to put a knot in your stomach.
Kanjorski discusses the following disclosure by Bernanke and Paulson:
On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. 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 and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.
If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.
We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment.
This is further confirmed on September 24, 2008, in a House Sub Committee Meeting at which both Bernanke and Hank Paulson are present, and Rep. Kanjorski confirms the facts with Paulson.
http://financialserv.edgeboss.net/wmedia/financialserv/hearing092408.wvx
Go to 1hr 50 mins 48 secs. into the video. Paulson answers Kanjorski's questions about the $550-billion run, but waffles a fair bit. You be the judge.
Hat tip: Live Leak, Zero Hedge
