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People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money
by runnerup 3y ago
People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.
- femiagbabiaka 3y agoExactly right. People want reliability and stability from "household names" and they're go to banks that are offering fundamentally worse products[1] in order to get it. 1: At least in savings. The larger companies have insane credit card deals.
- Invictus0 3y agoThat's because high yield bank accounts are a phenomenon of the last 6 months and retail by and large hasn't got the message yet. 0.01 is not likely to last forever, and the TBTF banks are losing deposits.
- mint2 3y agoWalked by a chase branch, they had some advertisement for a 4% cd. So Apparently the big banks are starting to feel the account drain. Also brokered cds from the likes of Wells Fargo and similar can be 5%. Big banks definitely are starting to feel it
- kevinventullo 3y agoCD’s are not the same thing as demand deposit accounts. They’re less liquid than treasuries.
- carlosjobim 3y agoHigh yield bank accounts was also something that suddenly appeared before the 2008 financial melt down. Now that they are appearing again I can be completely confident that we will see a huge economic depression. All man made of course - this could go away if it wasn't for the evil side of human nature.
- bradleyjg 3y agoThat’s still positive. If they want no risk, that number needs to be negative to cover the costs of holding and moving money around.
- runnerup 3y agoIt really doesn’t. They charge plenty of fees to plenty of customers. They also use daily banking as a loss-leader for profitable services like loans. Chase collected $1.25 billion in overdraft fees alone last year. My “Chase College” account currently gets charged $6/month for some reason I haven’t bothered figuring out, maybe a newly instated minimum balance or direct deposit requirement that wasn’t there years ago.
- bradleyjg 3y agoGreat, so if it really doesn’t already, let’s just get rid of the pretense. Make it illegal to offer demand deposits while taking risks with depositors’ funds. No more need to worry about bank runs.
- winkeltripel 3y agoIt's almost like the glass-steagal act had a good approach for the average person.
- lesuorac 3y agoEh, this really seems like moving the goal posts. The problem with SVB &other is not that they fundamentally were losing money. They just weren't making _enough_ money so they took on additional risk. If SVB hedged the IRR they wouldn't have gone bankrupt; they just would've had less profit. The banks people want are technically feasible.
- bradleyjg 3y agoThere’s no way to provide risk free returns on demand deposits, other than the government just deciding to give away money. Hedging doesn’t magically eliminate risk at zero cost.
- skeeter2020 3y agoand they're not even making that fractional interest after they pay fees and buy addons.
- ajmurmann 3y agoThis! I want my bank to be a place where I can place money to use for transactions. For returns I have my Vanguard account where I can pick investments for the risk/reward profile I want