Negative interest rates

[Broncojohnny]

http://www.cnbc.com/id/44019510

Bank of New York Puts Charge on Cash Deposits
Published: Thursday, 4 Aug 2011 | 11:19 AM ET
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By: CNBC.com

The Bank of New York Mellon said Thursday it would start charging "large depositors" to hold cash.

The bank [BK 24.09 -0.56 (-2.27%) ] said it was taking the action because of a sudden increase in dollar deposits prompted by fears among its customers about the recent debt crisis in the United States as well as concerns about Europe's debt problems.

The Bank of New York said its customers were in a "mass de-risk" mode.

Reuters reported that the move added to demand for US Treasury bills and pushed the rates for one-month T-bills close to zero.

[mstng86]

So what the hell does that mean?

The bank will charge customers to hold the cash, AND make interest on it and invest it anyway the bank wants??

[red95gts]

For once, it does make sense to hide money in your mattress...

[GhostTX]

So what the hell does that mean?

They will charge them to hold the cash, AND make interest on it and invest it anyway they want??

The bank is charging YOU for keeping money in the bank.

What a bunch of crap. I'd move my all my accounts out of that bank with a quickness.

[mstng86]

The bank is charging YOU for keeping money in the bank.

What a bunch of crap. I'd move my all my accounts out of that bank with a quickness.

I understand that, I guess I am really asking, Why? I don't understand.

[Hobie]

We're going to hold a fraction of your money in reserve to make lots of loans for money we don't have, we're also charging YOU for helping US profit, I SAY GOOD-DAY TO YOU SIR!!!

[Broncojohnny]

They have no place to put the money where they feel it is safe and will earn them a spread over what they are paying you to have it.

It also indicates that they feel there is some currency risk.

[mstng86]

They have no place to put the money where they feel it is safe and will earn them a spread over what they are paying you to have it.

It also indicates that they feel there is some currency risk.

In other words, they are just passing their losses along to the client.

[mustangguy289]

In other words, they are just passing their losses along to the client.

That is what every business does?

[mstng86]

That is what every business does?

Yea, when they are failing.

[Broncojohnny]

Yea, when they are failing.

No, this is one of the better banks in the country. Very conservative as well.

You can buy their shares at 90% of book value right now, while Bank of America is at 40% of book value. They have been dragged down with all the other banks.

[Sean88gt]

That should help the bottom line! Is the bank owned by the NTTA?

[mstng86]

No, this is one of the better banks in the country. Very conservative as well.

You can buy their shares at 90% of book value right now, while Bank of America is at 40% of book value. They have been dragged down with all the other banks.

Well, then this is more of a sign of a responsible bank being precautionairy then?

Is this a measure other banks are going to follow?

[bcoop]

i say good-day to you sir!!!

i said good day!

[Broncojohnny]

Well, then this is more of a sign of a responsible bank being precautionairy then?

Is this a measure other banks are going to follow?

I doubt that you will see major banks follow this unless things really really go to shit. It happened in Japan in the early 1990s when banks were holding Yen denominated deposits. It means the bank sees some risk in dollar denominated deposits or they are getting too many deposits. I think the latter could be more likely than the former because you have a lot of people fleeing from the Euro at the moment.

It illustrates what I have told Denny a hundred times, the dollar is the best of all the currencies people can hold. There is the Swiss Franc which some say is better but there aren't enough of them to go around from what I have read. I'm no currency expert by any means so maybe someone can chime in.