Planned Solutions

In this episode of the Planned Solutions Incorporated Podcast, The recent bank run that caused three large banks to fail in the US this year is a classic case of a Prisoner’s Dilemma. A Prisoner’s Dilemma is a game theory concept that illustrates how the optimal strategy for participants may lead to a less-than-optimal outcome that leaves all involved worse off. Fortunately, the Federal Reserve in the US was created to be a lender of last resort to stop bank runs from spreading and impacting other institutions Also, The recent bank run in the US has caused two banks to fail and a third is under tremendous stress. A review of these banks shows that they were outliers in terms of poor risk management on their reserves as well as having a high percentage of deposits that were not FDIC insured. The remainder of large and mid-sized banks appear to have been far more conservative and are likely to be more resilient. And, With the recent bank failures, the Federal Deposit Insurance Corporation (FDIC) has been in t