Are My Deposits and Investments Safe At Washington Mutual?

On the news of the Government seizure of the financial and lending giant Washington Mutual, bank account owners rushed to the banks to get their hard earned cash from the banks and ATMs. It seems that citizens’ trust in the country’s financial infrastructure has been broken. In San Francisco/Bay Area, CA, multiple cases of car sales with buyers handing the sales persons cash have been reported. People keep their cash at home, just like in the good old days.

A retiree in her seventies withdrew $25,000 in cash from her Washington Mutual checking account on the news. “I went to a car dealership and bought a new car,” she said. “The sales person at the dealership said many people came in that day handing him cash to pay for new cars.”

It appears that the new management of now non-existent Washington Mutual already knew what was coming and was prepared to greet lines of anxious Washington Mutual account holders lining up at the door early in the morning.

Seems like general public, not trusting the banks prefer to keep their money in the jar or spend it all. Does that mean that consumer spending will experience a temporary surge due to cash-rich citizens’ fear of losing their money?