George Akerlof and Robert Shiller, in their book Animal Spirits, identified five psychological factors that were important to understand animal spirits which, they argue, drive almost everything and are more than just confidence as measured by confidence indicators.
In the absence of the regulation and government backstop that have applied to the traditional banking system since the Depression, a run on assets in the entire repo market ensued. The resulting forced sale of assets into an illiquid market turned many illiquid institutions into insolvent ones.