Banks say they have too much money?

[logroller]

By ERIC DASH and NELSON D. SCHWARTZPublished: October 25, 2011

Bankers have an odd-sounding problem these days: they are awash in cash.
Droves of consumers and businesses unnerved by the lurching markets have been taking their money out of risky investments and socking it away in bank accounts, where it does little to stimulate the economy.
Though financial institutions are not yet turning away customers at the door, they are trying to discourage some depositors from parking that cash with them. With fewer attractive lending and investment options for that money, it is harder for the banks to turn it around for a healthy profit.
In August, Bank of New York Mellon warned that it would impose a 0.13 percentage point fee on the deposits of certain clients who were moving huge piles of cash in and out of their accounts.
Others are finding more subtle ways to stem the flow. Besides paying next to nothing on consumer checking accounts and certificates of deposit, some giants - like JPMorgan Chase, U.S. Bancorp and Wells Fargo - are passing along part of the cost of federal deposit insurance to some of their small-business customers.
Even some community banks, vaunted for their little-guy orientation, no longer seem to mind if you take your money somewhere else.

"We just don't need it anymore," said Don Sturm, the owner of American National Bank and Premier Bank, community lenders with 43 branches in Colorado and three other states. "If you had more money than you knew what to do with, would you want more?"...

.http://mobile.nytimes.com/article?a=858591&f=23

Honestly, I don't think I could say that with a straight face.Though I understand they're position, its rather infuriating to think these were the banks who received trillions in bailout funds, now they're awash with cash. -- :slap:

[revelarts]

money money thatn you know what to do with...

LOL that's quite a problem for our friends the banks.
LOL
maybe stop the Fractional Reserve stuff and start using people account on a full cash basis, relieving the FDIC of some responsibility.
turn banking into an honest business. for a start.

I'll wait for FJ to tell me i'm wrong and how we should feel sorry for the banks.

[ConHog]

I know what they could do with some of it. Pay more than 1% on a CD. How pathetic is that? Cashed a $10K CD recently because I can earn more interest with the money sitting in my checking account.

[KarlMarx]

1.6 Trillion dollars.. that's the number I heard that banks are sitting on. They feel that they can collect 2.5 percent interest on the stash and not take any risks. Banks blame Dodd-Frank for making lending too risky...

[revelarts]

I know what they could do with some of it. Pay more than 1% on a CD. How pathetic is that? Cashed a $10K CD recently because I can earn more interest with the money sitting in my checking account.
that's would be like offering a bank customer a valuable product, what a concept. that's a good idea CH.

here's another.
How about taking a cash hit for the country and come out looking like a good guy by forgiving all the outstanding mortgage debt. or get people right side up so the loans are legit.
Write it off on the books as a loss.

[ConHog]

that's would be like offering a bank customer a valuable product, what a concept. that's a good idea CH.

here's another.
How about taking a cash hit for the country and come out looking like a good guy by forgiving all the outstanding mortgage debt. or get people right side up so the loans are legit.
Write it off on the books as a loss.



I have a hard time with one, simply because there are people in homes they simply have no business being in. That would be rewarding people for bad decisions. I don't like that idea at all.

[Thunderknuckles]

I have a hard time with one, simply because there are people in homes they simply have no business being in. That would be rewarding people for bad decisions. I don't like that idea at all.
It beats rewarding banks for their bad decisions in the mortgage backed securities debacle.

Ugh...now I'm starting to sound like an OWS hippie :p

[avatar4321]

1.6 Trillion dollars.. that's the number I heard that banks are sitting on. They feel that they can collect 2.5 percent interest on the stash and not take any risks. Banks blame Dodd-Frank for making lending too risky...

Which is one of the reasons we need to repeal that piece of trash legislation.

[logroller]

Which is one of the reasons we need to repeal that piece of trash legislation.


From the OP

the profitability of each new loan has shrunk. Because the Federal Reserve effectively sets the floor off which banks price their lending rates, its decision to lower interest rates to near zero means the banks earn less money on the deposits they lend out...In fact, the pressure on spreads poses an even greater threat to the banks' earnings than the new financial regulations. Oliver Wyman, a financial services consulting firm, estimates that the industry's deposit revenue will shrink by more than $55 billion from its precrisis levels, dwarfing the roughly $15 billion in lost fee income from debit card and overdraft restrictions.

So it seems to me the Fed needs to raise prime rates, give that a shot before blaming the legislation which serves to protect the market integrity and investors.

[DragonStryk72]

Honestly, I don't think I could say that with a straight face.Though I understand they're position, its rather infuriating to think these were the banks who received trillions in bailout funds, now they're awash with cash. -- :slap:

It's like I was saying in the other thread on OWS, a lot of companies are holing up, taking in as much capital as possible due to the unstable economy and policies we have at this point.

[fj1200]

maybe stop the Fractional Reserve stuff and start using people account on a full cash basis, relieving the FDIC of some responsibility.
turn banking into an honest business. for a start.

I'll wait for FJ to tell me i'm wrong and how we should feel sorry for the banks.

You're wrong but why would I think you should feel sorry for a bank?


that's would be like offering a bank customer a valuable product, what a concept. that's a good idea CH.

here's another.
How about taking a cash hit for the country and come out looking like a good guy by forgiving all the outstanding mortgage debt. or get people right side up so the loans are legit.
Write it off on the books as a loss.

You do realize that the money you just proposed giving away actually belongs to someone else don't you? The problem as laid out isn't a banking problem it's the lack of demand for their product i.e. a loan.