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More Evidence We'll See Higher Deposit Rates


Recent news further indicate we'll see higher deposit rates in the near future.

Excerpt from WSJ: New Credit Hurdle Looms for Banks (see Google News for access):
At issue are so-called floating-rate notes -- securities used heavily by banks in 2006 to borrow money. A big chunk of those notes, which typically mature in two years, will come due over the next year or so, at a time when banks are struggling to raise fresh funds. That's forcing banks to sell assets, compete heavily for deposits and issue expensive new debt.

Excerpt from NY Times: Fed Hints it Raise Benchmark Interest Rate:
[Fed's] remarks reinforced a sense on Wall Street that the central bank is carefully watching the trend of rising prices, and is more likely to raise rates than lower them by the beginning of next year.

Thanks to the readers who mentioned these news articles.

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Anonymous   |     |   Comment #1
There is also another reason for higher interest rates:

"SEC Moves to Pull Plug on U.S. Accounting Standards
The Securities and Exchange Commission signaled the demise of U.S. accounting standards, kicking off a process yesterday that could ultimately require all publicly listed American companies to follow an international model instead."

No more creative financing or deals off the books at the banks. If there are not enough deposit accounts, the banks will look poor on the books and at share holder meetings.
Anonymous   |     |   Comment #2
Commentary: A Wake-Up Call on Home Equity Loans.
An increase in consumer complaints over the cancellation or reduction of home equity lines of credit has prompted one federal banking regulator to remind financial institutions about the laws governing this type of loan, according to a commentary in today's Washington Post.

The banks must honer these loans by all means, even if they have to raise new capital for financing such deals by issuing CD or other savings instruments.

This is another positive for savers.