When I saw the pictures that appeared earlier this month of dispirited-looking people standing in line, clearly waiting to receive something, I was at first confused -- it's too early for people to be lining up for "American Idol" auditions (nor did the folks in the photographs look psyched up
enough to be aspiring performers hoping for their big breaks). Then I wondered why the media was reprinting photos of the customers of British lender Northern Rock waiting to withdraw their funds -- actions which led to a run on the institution last fall.
Of course, I was both right and wrong. The pictures did document a run on a bank, but they were not a rehash of the Northern Rock crisis. This time the unhappy and frightened account holders were Americans -- customers of California-based IndyMac Bank, the latest institution to make headlines as both a casualty of and contributor to the still-unfolding subprime mortgage crisis.
I remember when summertime news used to be dominated by "lighter," more frivolous headlines -- hot dog eating contests, shark sightings, celebrity babies, etc. No more. For one thing, we unfortunately are subjected to these kinds of puff stories all year long. But they are no diversion from the distressing developments in the economy (not to mention war and politics, but those are topics for another column) that only have become more pronounced in recent weeks. As the month of July progressed, the IndyMac crisis was almost eclipsed by perhaps even more frightening news that Fannie Mae and Freddie Mac -- the two government-sponsored enterprises that just a few months ago were positioned as the stable, dependable players in the subprime mess -- were close to default.
That technology -- and the people who manage it, trying to fulfill an industry goal of supporting and enabling business strategies -- clearly is not the culprit here (and could perhaps have made a difference if it had been used appropriately) is small consolation as the business prospects in banking become ever bleaker. There's no fun in the sun for bankers this season. The familiar phrase made famous by the '70s blockbuster film franchise "Jaws" -- "Just when you thought it was safe to go back in the water ..." -- has become more applicable than ever, even though the only sharks in question probably are loan sharks.