Creature From Jekyll Island by G. Edward

gency conference call with the CEOs of all the major banks, including one who was located at great effort at his fishing lodge in northern Canada. The President is also tied into the telephone network but on a "silent-monitor" basis. Other than the Chairman, no one else knows he is listening.

TO SAVE THE BANKS IS TO SAVE THE WORLD

The CEO at Citibank quickly summarizes the problem. None of the banks will be able to sustain withdrawals of this magnitude for more than about forty-eight hours. Perhaps less. The money is not in their vaults. It has been put into interest-bearing loans. Even if the loans were performing, they would not have the money. Now that some of the larger loans are in default, the problem is even worse. If the Fed doesn't provide the money, the banks will have no choice but to close their doors and go out of business. That would cause a collapse of the economy and untold suffering Would follow.

Americans would be thrown out of work; families would go

hungry; national security would be weakened. And it would undoubtedly spread to the entire world. Who knows what dire consequences would follow—chaos, famine, and riots here at home? Revolution abroad? The return of a militaristic regime in Russia? Atomic war?

The Chairman cuts the monologue short. He is well aware that the banks must not be allowed to fail. That, after all, was one of the reasons the Federal Reserve was created. He wants to get on with the details of how to do it.

A PESSIMISTIC SCENARIO 539

Yes, the FDIC is already broke, but don't worry about that.

Congress will authorize a "loan" or some other mechanism for the Fed to create whatever amount of new money the FDIC might need. If Congress moves too slowly, the Fed has other technical means to accomplish the same result. In the meantime, unlimited funding will be available at the Fed's discount window by 8 A.M., Eastern Standard time. The printing presses are already running at full capacity to provide the currency. Fleets of airplanes and armored cars are standing by to deliver it. Furthermore, don't give up on those defaulted loans. Congress will probably bailout the bankrupt American corporation. And the President has said he will ask for additional funding for the IMF/World Bank. That money will be created by the Fed and carry the stipulation that it must be used by Mexico and other defaulting countries to resume interest payments on their loans.

The bankers are told to open their doors to the public and act calm. The press already knows that something is going on but not the seriousness of it. So tell them only what they already know.

Nothing more. If people want to withdraw their money, give it to them. If lines should develop, call the police to maintain order, but continue paying out. Offer to stay open after closing hours, if necessary, to accommodate everyone. Above all, have the tellers take their time. Check and double check each transaction. Move the lines slowly.

The armored trucks will arrive at the busiest hours so the guards can carry sacks of money past the customers for visual confirmation that there is enough for everyone. A bank officer then should tell the crowd that a fresh delivery of money has just been made from the Federal Reserve System and that there is plenty more where that came from. Once people become convinced that the bank is able to pay, most of them will tire of the wait and go home.

PANIC AVERTED

It is now 6 P.M.

of the following day. The plan was successful.

Lines of anxious depositors had formed yesterday morning, mostly in the larger cities, and resumed again this morning. But there has been enough money for everyone. The news media treated the story lightly, making sure to include sound bites from various experts that banks can no longer fail, thanks to the FDIC and the 540 THE CREATURE FROM JEKYLL ISLAND

Federal Reserve System. More than half the video time is devoted to armored trucks and guards carrying sacks of money. The banks closed on schedule today, and there were no more lines.

While everything appears calm to the passengers on deck, the fire still rages out of control in the boiler room. Over a billion dollars has already fled, mostly overseas, and the hemorrhage continues. The Fed is pumping in fresh money to replace it. Two of the banks have instructed their computer technicians to activate an automatic two-hour delay on all incoming transactions. There is talk of deliberately disabling the entire network and blaming the breakdown on overload, but the idea is abandoned. There are too many people in the system. Someone surely would leak the truth to the press.

The danger of a run on the banks by private depositors used to be the nightmare of the Federal Reserve. Now it is nothing compared to the electronic run that is taking place involving institutional depositors around the world. These are professionals who are not impressed by armed guards carrying bags of currency.