Remember the good old days, when banks paid you for the use of your money? (Cash interest on deposits).That’s starting to change.
First, thanks to Fed Chairman Ben Bernanke’s endless zero-interest-rate policy, which is designed to bail out banks and make borrowing cheaper, most banks aren’t really paying you for the use of your cash any more.
(Thus screwing savers at the expense of banks and borrowers. Thanks, Ben.)
And now, as panic begins to build about another new market crash and financial crisis, Bank of New York Mellon has gone a step further.
The bank is now charging corporate clients for holding their cash.
Any clients with more than $50 million on deposit at BONY, the Wall Street Journal says, will be socked with a 0.13% fee on that cash.
In other words, we don’t care what you do with all that cash you’re hoarding, just don’t keep it here.
Fortunately, this “pay us to keep your money” trend hasn’t yet been extended to individual savers, but that day may not be far away.
Meanwhile, it’s no mystery why BONY and other banks don’t want any more cash: They’ve already got it coming out of their ears. The banks still aren’t making loans, despite having been bailed out for the sole purpose of making loans. Instead, they’re just sitting on mountains of cash.
According to the Wall Street Journal, banks’ holdings of cash have increased by $890 billion this year, or 83%, while consumer loans are up only 0.2%, or $1.7 billion. Meanwhile, commercial and industrial loans are up only 3.8%, or $46.1 billion.
So if you feel yourself beginning to panic about the global markets and economy, don’t assume that you’ll just be able to yank your cash out and get paid to keep it safe in a bank. If other banks follow BONY’s lead, you’ll soon have to pay for that privilege.
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