The gap between interest rates banks pay to hold your money, and the rate they charge to loan you money seems to be be widening, and soon they may charge you do hold your money.

Are low interest rates a result of federal reserve requirements getting dropped to zero for savings accounts, and effectively zero for checking also through the use of sweeps? If banks don't need your deposits, then why would they compete for your dollars with interest rates, plus absorb the cost of holding those deposits.

 

Yes. They don't want people with $50 million + using their bank as a "safe haven" temporarily.

Most banks are flush (the ones that were bailed out, not the small local banks) with cash and basically do not need our cash for loans, etc. This is barely reported in the MSM, from what I can tell. Also, banks are still reporting loans that are no longer being serviced (nonpayment of note) as in good standing. In fact, the smaller local banks loan service reports are much more stringent than the monster-mega banks.

Also consider this, most bankers/branch managers are not even familiar with these requirements if they work for one of the monster-mega banks. Last year I sent a wire transfer to a broker and I was chatting with the branch manager (a woman in her 50's) and we were talking about Suntrust receiving over 4 billion in TARP money. She told me that she would be surprised if more than 5% of the account holders were even aware of it. I got a little off-topic, but you get the idea. There's a lot of shady things going on with the banks right now. And it seems to get worse as the economy/housing market worsens. The monster-mega banks have friends on both sides of the isle in D.C.

Fractional-Reserve banking is one of the biggest scams in the history of the world. Most bankers don't even fully understand it, even though they talk like they do.