Wednesday, October 26, 2011
Banks these days are practically turning away customers who have money to deposit, due to the fact they’re already sitting on top of too much cash.
Financial leaders claim the weak economy has left them with limited investment options, while worried consumers are preferring to save rather than spend, resulting in banks having a glut of money.
For instance, Wells Fargo took in $41.8 billion in deposits during the third quarter, but only loaned out $8.2 billion.
Some institutions, such as Bank of New York Mellon, are threatening to levy a 0.13% point fee on the deposits of clients who keep moving large amounts of cash in and out of their accounts.
Other banks, like JPMorgan Chase, U.S. Bancorp and Wells Fargo, are charging small-business customers fees in order to pass on their cost of insuring deposits through the Federal Deposit Insurance Corp.
Still others are cutting interest rates on CDs (now at an average of below 0.4%) to discourage customers from parking their funds there.
-Noel Brinkerhoff
In Cautious Times, Banks Flooded With Cash (by Eric Dash and Nelson Schwartz, New York Times)
Banks Still Earning Interest on $1 Trillion Reserves Thanks to Federal Reserve (by David Wallechinsky and Noel Brinkerhoff, AllGov)
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