Banks are sending largest depositors away because of onerous regulations.
When the first bank turned me away—I thought it was funny. But then, as I visited bank, after bank, after bank, the humor drained away, and it became downright exasperating… even infuriating.
I was moving to South Florida and, cash in hand, I found myself being turned away at branch after branch—every banking employee telling me they wouldn’t take my money and open a simple checking account.
Finally, the controller of the company hiring me had to call a branch president who was a personal friend, and only then could I get my precious bank account. All because I didn’t have a credit card to my name—I couldn’t get an account because I was actually trying to be responsible with money.
[Recently we’ve seen banks seem to hire their employees based on exactly the same criteria: If you’re wise with money, don’t bother applying—especially at the biggest institutions.]
Now, here’s the latest version of the financial world turned upside-down: Banks want to charge you for keeping money in their hands. In other words, not only won’t they pay you interest, you’re actually better off financially keeping your money yourself. Hmmm.
As Zero Hedge posts: “NIRP Arrives In The US: TBTF Banks Tell Customers To Move Their Cash Or Be Charged Fees.”
Back in June, the world was speechless when Goldman’s head of the ECB, Mario Draghi, stunned the world when he took Bernanke’s ZIRP and raised him one better by announcing the ECB would send deposit rates into negative territory, in the process launching the Neutron bomb known as N(egative)IRP and pushing European monetary policy into the “twilight zone”, forcing savers to pay (!) for the privilege of keeping the product of their labor in the form of fiat currency instead of invested in a global ponzi scheme built on capital market so broken even the BIS can no longer contain its shocked amazement.
Well, the US economy may be “decoupling” (just as it did right before Lehman) and one pundit after another are once again (incorrectly) predicting that the Fed may raise rates, but when it comes to the true “value” of money, US banks have just shown that when it comes to spread between reality and the economic outlook, the schism has never been deeper.
Enter US NIRP.
As the WSJ reports, far from paying for the privilege of holding other people’s cash (and why would they with nearly $3 trillion in positive carry excess reserves sloshing around) US banks – primarily of the TBTF variety – “are urging some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits.”
Given the new “bail-in” laws, maybe there are multiple reasons not to keep your funds in a bank. They either steal your money bit by bit, or all at once—we’ll confiscate a little now, or confiscate it all, later.