Earlier this month, we saw the largest bank collapse since the 2008 financial crisis. For many of us, seeing Silicon Valley Bank's meltdown brought us right back to that time 15 years ago, at the beginning of what would become the Great Recession. In early 2009, one or two banks were failing every week. That's when Planet Money reporter Chana Joffe-Walt went inside one of those banks: the Bank of Clark County, in Washington State. Her reporting on the inner workings of a bank collapse and government takeover helps explain exactly what happens when a bank goes under, minute-by-minute. This story originally aired in March 2009 on This American Life, from WBEZ Chicago. We're airing it for the first time in full on our podcast. This version of the story was produced by Dylan Sloan and edited by Dave Blanchard. It was fact-checked by Sierra Juarez and engineered by Katherine Silva. Jess Jiang is Planet Money's acting executive producer.Music: "Butter" "Bassline Motion" and "Fantasmi." Help support Planet Money and get bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney. Learn more about sponsor message choices: podcastchoices.com/adchoices NPR Privacy Policy
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As we've been sorting through the collapse of Silicon Valley Bank, Credit Suisse, and other financial institutions this month, we keep thinking back to this story that we did in collaboration with this american life back in 2009.
So in the depths of the financial crisis, in a time when one or two banks were failing every week, and during all of that, Chan Jaffe, Walt managed to get an inside view of a bank as it was taken over to document exactly what happens as a bank fails.
Now, the specifics of this 2009 bank story have some slight differences from what just happened with Silicon Valley bank.
The main difference is that the Federal Deposit Insurance Corporation, the FDIC, they had almost no time to prepare for the Silicon Valley bank collapse, and so they, they swooped in.
They essentially set up their own FDIC bank to take over Silicon Valley's assets.
On the other hand, in the episode you're about to hear, the FDIC had a lot more time to prepare for the takeover of the bank in the story.
And so the FDIC was able to line up an existing bank to buy the failing bank in that case.
But otherwise, a lot of the details, especially when it comes to the secrecy and precision of the whole operation.
Our textbook bank takeover.
Hello, and welcome to Planet Money.
I'm Kenny Malone.
Today on the show, we listen back to that 2009 story which was on the radio.
It was on this american life.
But as far as we can tell, this is the first time we've ever actually featured the full story on the Planet Money podcast.
So today we hear the minute by minute account of what happened when the FDIC took over the bank of Clark county.
Long before most of the bank of Clark county employees knew their bank was dead, the FDIC was planning its demise.
They'd been having meetings, contacting other banks in the region, trying to find one that would take over the bank of Clark County's assets after it failed.
All of these negotiations were top secret.
And then the time came.