Problem
1. Excess reserves make a bank less vulnerable to runs. Why, then, don't bankers like to hold excess reserves? What circumstances might persuade them that it would be advisable to hold excess reserves?
2. If the government takes over a failed bank with liabilities (mostly deposits) of $2 billion, pays off the depositors, and sells the assets for $1.5 billion, where does the missing $500 million come from? Why?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.