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Big Banks Fire Back At Deposit Guarantee

Monday, December 3, 2012 - 5:51 AM
From the Wall Street Journal
Big banks are urging lawmakers not to extend unlimited guarantees for about $1.4 trillion in bank deposits, a move that pits them against smaller banks and the top Democrat in the U.S. Senate.

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This unlimited deposit insurance coverage is only for noninterest-bearing transaction accounts. So it won't directly affect most of us, but it could affect small banks. I speculated in this September post that the end of this coverage could provide a tiny boost to interest rates.
3
Ken TuminKen Tumin5,469 posts since
Nov 29, 2009
Rep Points: 125,249
1. Wednesday, December 5, 2012 - 4:57 PM
It could also cause lower rates.  While some banks may need to raise rates to keep deposits, many banks will be lowering them as they are flooded with new requets.  I think overall, you'll see lower rates.

Some of the deposits could also very well see their way to the very large banks where customers don't see much of a chance of a failure. 
2
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
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