Fear lead to Panic

a friend has a money market account with a major bank that is over the limit of FDIC guaranteed coverage and wanted to withdraw the excess amount asap on Wednesday. This Wall Street Journal article mirrors her fears..

Huddled in his office Wednesday with top advisers, Treasury Secretary Henry Paulson watched his financial-data terminal with alarm as one market after another began go haywire. Investors were fleeing money-market mutual funds, long considered ultra-safe. The market froze for the short-term loans that banks rely on to fund their day-to-day business. Without such mechanisms, the economy would grind to a halt. Companies would be unable to fund their daily operations. Soon, consumers would panic.

Bank money market funds are covered by FDIC and joint accounts are covered as 2 accounts.

If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner's shares of the two accounts are added together and insured up to $100,000, providing up to $200,000 in coverage for the couple's joint accounts.