‘Run’ on Border Banks, Spurred by Rumor, Tapers Off

Financial institutions with branches near the U.S.-Mexico border reported Thursday that the flood of Mexican customers who sought to close accounts earlier this week has been reduced to a trickle, thanks to an aggressive campaign to correct a runaway rumor.

On Monday, area banks noticed what one official called a “slight run” on San Ysidro branch offices, as scores of Mexicans lined up to withdraw money. The Mexican customers told bank employees that they had heard media reports in which a Mexican economist predicted that, if the United States goes to war with Iraq, President George Bush would freeze their accounts.

HomeFed Bank, which has two San Ysidro branches, called the Office of Thrift Supervision in San Francisco, the primary regulator of S&Ls;, for guidance. Bank officers were relieved to learn that no such freeze was imminent.

According to Laurie Lavaroni, a spokeswoman for the federal office, the War Powers Act enables a U.S. president to direct the Treasury Department to freeze the accounts of a hostile nation. But the government may not freeze individual accounts of nationals from a hostile nation, Lavaroni said. Furthermore, if war breaks out in the Middle East, Mexico would not be considered a hostile nation anyway.

Beginning Monday, local financial institutions set about the task of reassuring their customers. Wells Fargo & Co., which has four branches in the border area, printed up leaflets and issued a press release to the Mexican media. Not only are Mexican deposits still safe and secure, the release said, but they are insured up to $100,000 by the Federal Deposit Insurance Corp.

Security Pacific National Bank, which estimated “at least” $2 million had been withdrawn from its San Ysidro office in the wake of the rumor, made its San Ysidro branch manager available for interviews on Mexican television Tuesday night.

By Thursday, the financial institutions reported, the worst was over.

Enrique Sanchez, the Security Pacific branch manager who was interviewed on Mexican television, said that, as a result of the public relations efforts, “things have calmed down a bit.”

Dan Conway, a spokesman for Wells Fargo, agreed. “We’ve already seen the peak, and it’s quieted down,” he said.

Kaye Rowan, a spokeswoman for HomeFed, the San Diego-based savings and loan, said that, as of Wednesday, things had returned to “almost normal.” On Thursday, she said, “it was pretty slow too, as far as concerns of that nature. We’re hoping a lot of the questions have been answered.”