The failure of IndyMac Bank signals a coming depression, according to doom-and-gloom reports from ABC’s “Good Morning America.”
Correspondent Bianna Golodryga glumly predicted on the July 14 broadcast that “300 banks could fail within the next three years.”
“So where should you put your money right now?” host Robin Roberts asked. “Because I know there are some images of people feeling like people are stuffing their mattresses like they did back in the Depression.”
Comparing current economic conditions to the Great Depression is a common theme for the media. A recent report by the Business & Media Institute, “ [1]The Great Media Depression,” found networks made the comparison more than 40 times in early 2008.
Mellody Hobson, president of Ariel Investments and an ABC contributor, told Roberts money in the bank is safe and secure.
“[H]ere’s what we also know, in the 75-year history of the [Federal Deposit Insurance Corporation (FDIC)], none of the people who have had their money in the banks with the insured amount have lost one penny,” Hobson said.
“My money is in a bank and I do think the U.S. banking system is sound,” Hobson said. “This is not the first bank to fail in this country. It has happened from time to time and when it has happened, we’ve had swift action and the rest of the banking system has survived and thrived. I don’t think that it will be any different this time.”
CNBC’s Erin Burnett also tried to calm fears expressed by NBC “Today” show host Matt Lauer, who asked “emotionally versus the reality, what’s at stake for the people who have money deposited there?”
Burnett pointed out that IndyMac, like most banks, was FDIC-insured, meaning deposits of up to $100,000 are safe. “Guaranteed… if [your money] is FDIC insured, you will get your money back,” Burnett said.
But Burnett added her own Depression throwback: “It’s a frightening thing; a run on a bank is a frightening thing. I mean we all know the famous movie, ‘It’s a Wonderful Life.’ That is what we’re dealing with here.”
She was referring to the 1946 film starring Jimmy Stewart as George Bailey, a small-town loan officer whose town suffers a bank failure.
Of course, hysteria is what leads to a run on a bank.
Despite knowing that the situation is under control and people’s money is safe, ABC and NBC still felt the need to raise panic scenarios by referring to the worst financial crisis in U.S. history.