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Banks urge larger, commercial customers to take cash deposits elsewhere

tidefanbeezer

tidefanbeezer

All-American
Sep 25, 2006
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Atlanta, GA
This will be an inconvenience for the commercial clients, but there are lots of super-regional, regional and smaller banks willing to take some or all of their deposits.

Ultimately, the liquidity coverage ratio is a good thing and will help mitigate some of the impact of a 2007 style crash, given that banks will be required to hold larger reserves to sustain them through a crisis.
 
G

graydogg85

1st Team
Feb 7, 2006
937
179
62
Huntsville, AL
The lawmakers that are writing bank regulations these days have little concept of the economic collateral damage they cause. Banks have been required to keep reserve accounts for awhile now, and those reserves come directly out of a bank's net income. By increasing the reserve percentage thresholds on deposits, they are giving banks all the incentive they need to turn away deposit accounts. And this is in a climate where wholesale funding / fed funds are already cheaper than deposit-based funding.

So in essence, they've made deposits much less attractive for banks, which in turn will lead to banks leaning more heavily on wholesale funding. The exact opposite of what the regulation intended.

Don't get me started on Dodd-Frank....
 
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