[toast0]

Many of the credit unions I've looked at don't allow commercial accounts. There's not a whole lot of need for people to hold more than the deposit insurance amount in one institution, whereas it does make sense for many companies. If more of the deposits are covered by deposit insurance, I think there's less of a risk of a bank run --- I wouldn't try to get a significant amount out of my accounts even if I knew the credit union was going to fail, because I know I can get it all on the Monday after it fails; guaranteed by NCUA, backed by the US Government. Still, I think a significant run would likely cause the credit union to fail, it's not easy to provide 20% of deposits on one day.

Some credit unions do provide service to businesses though. So they might have similar concentration of account issues.

[dhosek]

You’re assuming rationality on the part of depositors. I remember there being a run on a local savings and loan in the town where I grew up when I was in my 20s. I knew a few people who had money in CDs, well below the insurance amount, who took the early withdrawal penalties to take their money out of the S&L even though they were insured and their was no chance of any loss if they just held tight. Sort of like all the people who panic sell at a loss when the stock market dips.

[toast0]

I mean, if people run, the bank or credit union will fail. But people are fundamentally lazy and there's not much of a difference between getting your money on thursday and the next monday, so there's less urgency. People are also fundamentally panicy too, so I agree there's still a risk.

Stock market 'circuit breakers' that halt trading when the stock moves too fast seem to be pretty helpful. Maybe banks need something that halts withdrawals when they reach 10% of last reported deposits. (Spit ball: each depositor may withdrawal at least 10% of their current balance or last two statement balances, whichever is more, any excess is allocated on a dollar basis across the day's withdrawal requests. Some mechanism to pre-request funds so you can be sure you can wire large payments for houses, etc)

[dhosek]

Edwards: Why the big secret? People are smart. They can handle it.

Kay: A person is smart. People are dumb, panicky dangerous animals and you know it. Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.