It isn't. That's a myth. It never has been how banks work and never will be.
Destructive runs can never happen in a modern banking system if the central bank does their job properly.
If everybody takes their money out of a bank in trouble, then the central bank ends up as the main depositor in that bank.
Which is as it should be - since they were regulating that bank.
The question here is whether the regulator has been asleep at the wheel and whether depositors over the FDIC limit are going to pay for that.
It isn't. That's a myth. It never has been how banks work and never will be.
Destructive runs can never happen in a modern banking system if the central bank does their job properly.
If everybody takes their money out of a bank in trouble, then the central bank ends up as the main depositor in that bank.
Which is as it should be - since they were regulating that bank.
The question here is whether the regulator has been asleep at the wheel and whether depositors over the FDIC limit are going to pay for that.