Source: Michael S. Rosenwald, Washington Post ( Free Registration )

After IndyMac Bancorp failed, customers waited in line for hours to collect their money. The police had to be called in to quell the mob. The scenes brought to mind dire moments from the Great Depression. This time, with satellite TV trucks parked outside the bank’s branches, the world watched last week as our financial system took another body blow.

On the Federal Deposit Insurance Corp. Web site, IndyMac customers were told: “If the balance in your account . . . is less than $100,000, no action is required on your part at this time.” The money is insured. But Ruben and Rosalie Uranga, who had less than $100,000 in deposits, lined up anyway, along with many others in similar circumstances.

Why? Though Rosalie Uranga told reporters “Why take a chance?” many behavioral economists watching people herd in line at the bank—or flush their portfolios of Fannie Mae and Freddie Mac stock—sense a much deeper, even primal, response at play. I suppose the only way to say this is to just say it: People are acting like frogs.

Read Full Article: Herd mentality, even against our best interests