Today markets crashed as much as they did in October 2008.The main reasons: contagion from the Euro zone crisis and an overwhelming debt burden.
And there’s more bad news: In the last 2 weeks, investors have been stashing hoards of cash at banks like BNY Mellon and JPMorgan — so much so that BNY Mellon had to slap huge fees on accounts over $50 million.
BNY wrote in a memo today:
“We have noticed certain clients with extraordinarily high deposit levels…” They also mention that they noticed the trend began a month ago — right before the market went to crap.
It costs BNY Mellon in particular a lot of money to hold the cash because it’s harder for it than it is for JPMorgan, for example, to move the money into loans.
So if the investors want their “safe haven,” they’ll have to pay some of that cost.
Over the past two weeks, money-market funds, corporate treasurers and investment houses have pulled money out of securities [and stashed their] cash in bank accounts at BNY Mellon and other banks with custodial operations like J.P. Morgan that earn no interest, but which are insured by the Federal Deposit Insurance Corp…
BNY Mellon will charge 0.13% plus an additional fee if the one-month Treasury yield dips below zero on depositors that have accounts with an average monthly balance of $50 million “per client relationship,” according to a letter reviewed by The Wall Street Journal…
“In the past month, we have seen a growing level of deposits on our balance sheet from clients seeking a safe-haven in light of the global interest rate and credit environment,” the bank said Thursday in an emailed statement. “We have notified certain clients with extraordinarily high deposit levels that we will begin implementing a 13 basis point fee on the excess deposits. Clients who maintain routine deposit levels will not be affected.”