US Banks to Fed "further interest rate cuts will lead to depositor charges"

[Hood Critic]

http://www.zerohedge.com/news/2013-11-24/banks-warn-fed-they-may-have-start-charging-depositors

The Fed's Catch 22 just got catchier. While most attention in the recently released FOMC minutes fell on the return of the taper as a possibility even as soon as December (making the November payrolls report the most important ever, ever, until the next one at least), a less discussed issue was the Fed's comment that it would consider lowering the Interest on Excess Reserves to zero as a means to offset the implied tightening that would result from the reduction in the monthly flow once QE entered its terminal phase (for however briefly before the plunge in the S&P led to the Untaper). After all, the Fed's policy book goes, if IOER is raised to tighten conditions, easing it to zero, or negative, should offset "tightening financial conditions", right? Wrong. As the FT reports leading US banks have warned the Fed that should it lower IOER, they would be forced to start charging depositors.

In other words, just like Europe is already toying with the idea of NIRP (and has been for over a year, if still mostly in the rheotrical and market rumor phase), so the Fed's IOER cut would also result in a negative rate on deposits which the FT tongue-in-cheekly summarizes "depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households."

 

[Domingo Halliburton]

yeah we have negative real interest rates. You are losing money by keeping it in a bank and not in the market.

 

[88m3]

hmm

 

[Brown_Pride]

so basically we'll be paying for "security".
Banks - "We're slightly more secure than grandma's mattress"

This is the ultimate in reverse fukkery. I said not to long ago that companies should be fighting and paying for the opportunity to sell shyt to the consuming american public, instead we pay them. Now we're doing the same thing with the banks. Instead of them paying us money for the ability to use our money, they are gonna start charging us to keep our money safe.

Time to invest in a home safe company.

 

[Domingo Halliburton]

so basically we'll be paying for "security".
Banks - "We're slightly more secure than grandma's mattress"

This is the ultimate in reverse fukkery. I said not to long ago that companies should be fighting and paying for the opportunity to sell shyt to the consuming american public, instead we pay them. Now we're doing the same thing with the banks. Instead of them paying us money for the ability to use our money, they are gonna start charging us to keep our money safe.

Time to invest in a home safe company.

I really doubt you're going to see a bank charge to hold your deposits. Its the lifeblood of most of these small community banks.

 

[Oville]

I know raising interest rates my hurt job growth but its concerning to see that they've been kept at near zero for so long and think that there won't be consequences in the future

 

[the cac mamba]

 

[ill]

so basically we'll be paying for "security".
Banks - "We're slightly more secure than grandma's mattress"

This is the ultimate in reverse fukkery. I said not to long ago that companies should be fighting and paying for the opportunity to sell shyt to the consuming american public, instead we pay them. Now we're doing the same thing with the banks. Instead of them paying us money for the ability to use our money, they are gonna start charging us to keep our money safe.

Time to invest in a home safe company.

Banks are at least insured so if something catastrophic happens, you still get your money. Grandma's mattress goes missing and you aren't ever seeing a dime.

I do agree about them paying us. CD rates and savings interest have been worthless and I haven't seen the numbers but I would guess you lost money in a CD the past few years due to inflation.

 

[Brown_Pride]

Banks are at least insured so if something catastrophic happens, you still get your money. Grandma's mattress goes missing and you aren't ever seeing a dime.

I do agree about them paying us. CD rates and savings interest have been worthless and I haven't seen the numbers but I would guess you lost money in a CD the past few years due to inflation.

I agree the security is there vs a mattress, but the idea that they use your money to leverage other things and then want to charge you for holding on to it is like parking your car at a garage and while you're not using it the garage owner uses it to haul shyt around town then has the nerve to charge you storage fees....