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The paper is an extended version of the Chapter 1 of the Special Issues paper (IMF, 2009A) prepared as background for the 2009 Article IV consultation with Canada. We thank Martin Cihak, Stijn Claessens, Rupa Duttagupta, Marcello Estevao, John Kiff, Charles Kramer and Kevin Ross for very helpful comments.
Mr Huang is with the Federal Reserve Bank of Philadelphia. The views expressed in the paper do not necessarily represent those of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
Another possible reason is that substantial fraction of deposits in these banks came from market sources, such as large denomination CDs and brokered deposits. One striking example is that of Washington Mutual which, according to the Office of Thrift Supervision, suffered a massive withdrawal of $16.5 billion by large depositors in two weeks preceding its collapse.