In Amish country, a bank run is about as familiar as a Hummer or a flat-screen TV. For decades, the more than 200,000 Amish in the U.S. have largely lived apart from the mainstream, emphasizing humility, simplicity and thrift. Known as “the plain people,” they travel by horse-drawn buggy, wear homemade clothing and live with very little electricity.
But the Amish in northern Indiana edged into the conventional economy, lured by the high wages of the recreational-vehicle and modular-homes industries. And they wound up experiencing the same economic whiplash millions of other Americans did.…
Some Amish families had bought second homes on the west coast of Florida and expensive Dutch Harness Horses, with their distinctive, prancing gait. Others lined their carriages in dark velvet and illuminated them with battery-powered LED lighting.
Even the tradition of helping each other out began to unravel, Bishop Hochstetler says. Instead of asking neighbors for help, well-to-do Amish began hiring outsiders so they wouldn’t have to reciprocate….
There was a bank run:
Only Amish people can join. … There are no credit checks. Monthly mortgage payments can be no more than 33% of a borrower’s gross income.
The trust’s structure reflects the Amish philosophy of sharing. It isn’t insured by the Federal Deposit Insurance Corp., but by its own bylaws it maintains at least $1 million in cash reserves. The trust has never exercised its authority to foreclose on a home.
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Last fall, as layoffs drained income from the community, deposits into the trust fell to about $600,000 from between $1 million and $1.5 million a month…. In November, the trust suspended lending.
Over the winter, rumors began to circulate that the trust was running out of money. … 100 depositors made significant withdrawals, and some emptied their accounts. The $1 million reserve fund was wiped out. The trust hasn’t yet resumed lending.
Tyler Cowen sees more in the story: Amish purchasing goods for status.