It use to be the stock market would go up even when bad news was announced. Now we have have a bank run on a bank that has already been taken over by the FDIC. Can someone explain that to me?

I mean, are people really so ignorant that they don’t realize that the damage has been done once the government has taken over? If their accounts are under 100 grand they have nothing to worry about. If their accounts are over 100 grand it is to late to do anything about it.

It would seem more rational for their to be a run on banks that have not been taken over yet.

Edit: I just found this story from Reuters…..

At a branch at IndyMac’s headquarters, customers began arriving at 4 a.m., five hours before the doors opened. The Federal Deposit Insurance Corp now operates the thrift’s 33 Southern California branches.

“I didn’t think anything like this would happen,” said retired teacher Charles Tengeri from Pasadena, who was first to emerge from the branch after withdrawing $171,000 — about two-thirds of his life savings. “I withdrew as much as I could. I know it’s going to take a little time.”
The FDIC said the renamed IndyMac Federal Bank will cover insured deposits, mostly up to $100,000, and initially cover 50 percent of uninsured deposits.

“I have $360,000 in this bank, and I was misled by this bank,” said Robert Clark, a Glendale resident. “I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don’t know what to do. I really don’t know what to do.”

The guy who came out with $171,000 must have had a joint account. Otherwise he would have only got $100,000 out. And if you had $360,000 why would you try to game the system by giving the names of every relative under the sun so that you could keep all your money in just one account? Why not just open up an account somewhere else?

I think the guy knew that Indymac was in trouble but wanted to take advantage of high interest rates they were offering. You play with fire, you get burnt.