I talk a little bit about it in Meltdown. It was a case of the banks not having money available for deposit, but holding it instead in the form of income-earning securities. If they were to sell off a large number of these to raise cash for depositors, it would crash the value of the rest of the bank’s portfolio. The mainstream response to this is to say the banks need to be supported in cases like this, when to me the obvious response is that they shouldn’t do it in the first place.
