We know these banks are killing profitability and hurting the system. Why don't we seize em'?
Bair mentioned that they're planning to finalize rules related to this on Friday. According to Bair:
we are going to be more aggressively using the tools that we have to try to get those deposit rates down.
The new rules will likely be directed to troubled banks. It's already common for the FDIC to prohibit these banks from taking on additional brokered deposits, which are often viewed as risky sources of funding. We'll see Friday what other types of deposits will be affected.
Even though a few banks that are in bad shape offer top rates, I haven't seen many cases of these banks offering rates way above what healthy banks offer. Corus Bank is an example. Cramer asked why a bank like Corus Bank is "allowed to stay in business." Cramer said it "seems like an accident waiting to happen." As you would expect, Bair was careful not to comment on Corus Bank or any bank that's still open and operating. But it's well known that Corus is in bad shape financially. BauerFinancial gives Corus its lowest score (zero) for safety and soundness. As you can see in my weekly rate summary, Corus Bank does offer top money market rates and top rates on 6- and 12-month CDs. However, I wouldn't call these excessive. Their current money market rate is only 2.17% APY, and the 6- and 12-month CD rates are 2.20% and 2.71% APY. There are several healthy banks with higher money market and savings account rates. If Corus Bank slashes its rates in the next few weeks, we'll know why it happened.
Credit for this find goes to FW member Katoo who mentioned this interview in this FW thread.