The 3 Superbanks and the Effects on Depositors
Nov 6, 2008 - 9:21 PM by Ken Tumin
This MSNBC article reviews the 3 new superbanks that have been created this year as several of the nation's largest banks have been acquired by the healthier giants. These 3 banks now control about 32% of the nation's deposits. The article mentioned one of the results of reduced bank competition: higher fees. But it didn't mention another result: lower deposit rates. Some examples that we've seen this year include:
- Countrywide (acquired by Bank of America, 11.3% of nation's deposits) Its SavingsLink account and CDs have dropped off the highest-rate lists. SavingsLink yield is now 3.15% APY for balances between $10K and $50K. Highest internet CD yield is now 3.90% APY.
- WaMu (acquired by JPMorgan Chase, 10.2% of nation's deposits) WaMu's online savings account rate dropped from 4% to 2.50% and its 1-year CD yield fell to 3%.
- Wachovia (acquired by Wells Fargo, 11.2% of nation's deposits) Wachovia's Featured CD rates have been falling, and they recently dropped some of the unadvertised long-term Featured CDs. Current Featured CDs for Texas include a 5% APY 60-month CD, 4% APY 12-month CD and a 3% APY 7-month CD.
Banks Mentioned in this Post:
Featured Savings Account
Nationwide Savings Accounts
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marc (anonymous) - #1, Friday, November 7, 2008 - 2:13 AM
I don't think it's the reduction in competition lowering the rates in this case. It's the fact that the mergers made it such that the "trouble" bank of the combo was rescued by the "good" and therefore the formerly troubled entity no longer has to beg for deposits. Had they not merged, most likely the rates would have gone down anyway by way of the high-paying portion of the mergers not existing anymore.
trinidon2k (anonymous) - #2, Friday, November 7, 2008 - 6:50 AM
man...this blows. I love Countrywide's bank (especially the fast ACH transfers), but this is just ridiculous. Time to start looking I guess.
I don't care if a bank is troubled or not. High rates bring in customers. Low rates make them leave.
BloggingBanks (anonymous) - #3, Friday, November 7, 2008 - 8:25 AM
This is definitely worrysome for depositors. We might get less bank bonuses as well..
Anonymous - #4, Friday, November 7, 2008 - 2:20 PM
Heck with them, I left $1 in their accounts.
Jim (anonymous) - #5, Friday, November 7, 2008 - 3:12 PM
Countrywide just lowered their CD rates.
Anonymous - #6, Friday, November 7, 2008 - 6:29 PM
What bank do you recommend for deposits?
Anonymous - #7, Monday, November 10, 2008 - 7:53 PM
I see "AmEx approved to become bank holding company" - wonder what that will do to the world of banking and rates.
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