'The inmates are officially running the asylum' - Banks don’t want to have liquidity?

The Fall of the American Empire

'The inmates are officially running the asylum' - Banks don’t want to have liquidity? (Yahoo) HT: Villagerswithtorches).

Banks urge clients to take cash elsewhere. New rules mean some deposits aren’t worth it, J.P. Morgan, Citigroup and others tell large U.S. clients.

Banks 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.

The banks, including J.P. Morgan Chase  Co., Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America Corp., have spoken privately with clients in recent months to tell them that the new regulations are making some deposits less profitable, according to people familiar with the conversations.

In some cases, the banks have told clients, which range from large companies to hedge funds, insurers and smaller banks, that they will begin charging fees on accounts that have been free for big customers, the people said. Bank officials are also working with these firms to find alternatives for some of their deposits, they said.

The change upends one of the cornerstones of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding, said more than a dozen corporate officials, consultants and bank executives interviewed by The Wall Street Journal.

Deposits have traditionally been a crucial growth engine for banks. Banks generally pay depositors one interest rate and then make loans with higher rates, often collecting fees in the process. But deposits also can be withdrawn at any time, potentially leaving a bank short of cash if too much money is removed at once. Hmmm.....Someone going for a new October revolution? Read the full story here.