US banks face consumer unrest

16 July 2008

The potential collapse of California bank IndyMac has led to considerable saver unrest, reports suggest.

A queue of customers waiting to withdraw their savings from the bank at a San Bernadino branch even had to be broken up by police yesterday, due to crowd trouble.

IndyMac is understood to be facing severe revenue-raising problems due to the credit crunch - in common with government-backed lending giants Fannie Mae and Freddie Mac, who received reassurances of support from treasury secretary Henry Paulson earlier this week.

The Federal Deposit Insurance Corporation said yesterday that all accounts of $100,000 or less would be fully compensated for in the event of a bank's collapse, and that customers should not panic.

Frederick Cannon, chief equity strategist for Keefe, Bruyette & Woods, told the Los Angeles Times that banks "are working very actively with their depositors to explain how insurance works, and what's covered."

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