FINANCIAL INTERMEDIATION MALFUNCTIONS
Financial intermediation failures occurred for banks during the Great Depression and for savings and loans during the savings and loan crises of the 1980s
During the 1930s worried depositors and rumors triggered runs on banks
Since banks, as financial intermediaries, never keep 100% of funds on hand, the runs closed down thousands of healthy banks
To prevent this from happening again, the U.S. government began to provide deposit insurance for banks and savings and loans