Subprime Lineage

          The reports of a recent depositor run at the Countrywide Bank in California may reveal an emerging shortcoming in comfort with the industry's FDIC insurance.  See article in Atlantic Journal-Constitution.  This new phenomena of undifferentiated fear may be the result of the increasingly complex and intertwined system of financial products confronting and confusing investors.  An insightful analysis of this growing customer anxiety and the potential inability or unwillingness of bank customers to differentiate the "insured" financial product from the uninsured financial instrument can be found in the Op-Ed column by Paul Krugman of the New York Times available here (subscription required). 

          Whether more regulation, or simply more common sense, is needed to deal with the recent credit events, Barney Frank, Chair of the U.S. House Financial Service Committee believes in and is urging more federal intervention.  See Financial Times article.  Mr. Frank calls for regulation of mortgage brokers, guidelines for securitization of mortgages, and a total reevaluation of the regulation of financial markets.