Here's an interesting story; one of the big money center banks, Bank of New York-Mellon, is charging corporate clients for putting money in checking accounts. We're used to seeing that for small-fry individuals, but this is being applied to the big, multi-million dollar accounts.
The reason is that with short-term interest rates at near zero, banks are losing money on checking deposits. They have to pay the FDIC a tenth of a percent a year as deposit insurance and T-bills are making less than that; at the peak of l'affair debt-ceiling, it had gotten up to 0.09%, but has crashed back down to 0.01% at last check.
When savings accounts are earning squat, there is little reason not to keep spare cash in cash. Banks are used to making their money on the difference between what they pay to get money and what they lend it out for. Normally, checking accounts are cheap money, with a zero interest rate less any transactions costs. However, when they get next-to-nothing on their investments, that interest spread starts to become effectively negative.
Interesting times, indeed.
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