flynn23 wrote:
That's not exactly true. Those $100K deposits have to go somewhere, and now that the gubment has done enough cleanup to maintain money-market accounts at par value (rather than their discounted value last week), then those deposits will come back into the market. It will probably be an inflow of capital into sectors that already don't need it (t-bills, gold, muni bonds, etc) but it's not like it will be a giant sucking sound that doesn't have an echo.

It's amazing to me how virally susceptible the financial system was and with this new sculpting, it appears it will be even worse, not better. Is there ANY long term planning associated with Wall Street or the Fed?

In this case, I think it is that sucking sound. The issue is, as a commercial bank, they'll no longer be able to hold at the 2-3% cash holding they've been operating at, and will have to go back to 10-12% cash holdings. That means the money will not be reinvested because it needs to be held for depositors/margin calls. It won't go back into one of the other areas because it can't.

RE: Last major investment banks change status - Yahoo! News