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Withdrawn: $114Billion From Big US Banks

Thursday, January 24, 2013 - 9:32 AM
From BusinessWeek:
More than $114 billion exited the biggest U.S. banks this month, and nobody’s quite sure why. 

The Federal Reserve releases data on the assets and liabilities of commercial banks every Friday. The most current figures, covering the first full week of 2013, show the largest one-week withdrawals since the Sept. 11, 2001, attacks. Even when seasonally adjusted, the level drops to $52.8 billion—still the third-highest amount on record, and one for which bank experts and analysts were reluctant to give a definitive explanation. 

The most obvious culprit is the expiration of the Transaction Account Guarantee program, the extraordinary federal effort to shore up the country’s non-gigantic banks during the 2008 financial crisis. 

[...] Experts had predicted that the end of TAG would hurt the nation’s small banks because the big ones are still considered too big to fail. [...]  Small banks fearfully lobbied the Senate to extend TAG, with analysts telling the New York Times that they expected $200 million to $300 million—yes, with an m—to move from affected accounts into money market funds or elsewhere.

So if the missing $114 billion is not the result of the TAG program expiration—or at least not all related to TAG—what’s going on?

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4
pearlbrownpearlbrown1,431 posts since
Nov 2, 2010
Rep Points: 6,249
1. Thursday, January 24, 2013 - 1:00 PM
The TAG effect should have been mostly a wash.  As one bank loses deposits another would gain.  I saw another article about a near record increase in stock purchases.  Many people are chasing yield and moving into riskier asset classes just to try to earn a decent return.
2
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 456
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