Wall Street Doubters Growing

Like wealth, a reputation takes years of hard labor to build -- yet can evaporate in a moment.

It's clear from recent stock-price plunges in Citigroup(C), Merrill Lynch(MER), Morgan Stanley(MS), Goldman Sachs(GS), Lehman Brothers, JPMorgan Chase(JPM) and Bear Stearns(BSC) that investors are scrambling to get their money out of the big brokerage firms' shares.

But shareholders may soon be confronting an even harsher reality: Customers may be scrambling to get their money out of brokerage firms, period.

A retired family member felt it extremely urgent over the past weekend to find out if I thought he should remove his life savings from the hands of Smith Barney, the brokerage division of Citigroup. He's worried about whether his money is safe if things continue to deteriorate. If there are enough of him, these institutions could encounter so-called runs on the banks, or mass withdrawals at least.

While things like federal deposit insurance seem to suggest there's no need for anyone to really worry about the safety of their money, it's clear that many investors are of a different mind.

"It seems pretty clear to me that, bank runs or not, the financial system is pretty close to melting down here," says Scott Frew, general partner at hedge fund Rockingham Capital Partners. "We're at such a tenuous moment that anybody who isn't scared to death about the possible denouements hasn't thought things through carefully enough."