So Much Cash Pulled from Stocks - Bank of NY to charge fee for DEPOSITS

[Chimichurri]

(AP) - Nervous investors around the world have been selling anything deemed remotely risky in recent days and parking their billions in cold hard cash—so many billions, in fact, that Bank of New York will soon be charging some of its institutional customers a fee just for the privilege to hold their cash.

The bank's customers are mainly large pension funds and money market funds. It does not deal directly with consumers. Bank of New York collects dividends on stocks and holds cash deposits, among other things, on behalf of large investment funds.

Large investors have moved so much money into cash accounts at Bank of New York that on Thursday the bank said it would begin charging a 0.13% fee to clients with "extraordinary high deposit levels." Bank of New York didn't say what that level was.

"In the past month, we have seen a growing level of deposits on our balance sheet from clients seeking a safe-haven in light of the global interest rate and credit environment," the bank said in a statement

http://www.crainsnewyork.com/article/20110804/FREE/110809946

The move, which equates to a negative interest rate, aims to pass some of the cost to clients as deposit banks must pay about 0.10% to the Federal Deposit Insurance Corporation to insure deposit accounts.

A negative yield means investors are willing to pay a small premium to own T-bills, which are sold originally by the Treasury Department at a discount. The willingness to forego a return underscores heightened anxiety about the global economic outlook.

"Escalating concerns about the European crisis and stalling global growth have caused flight from risky assets, which has benefited Treasurys. It has been a perfect environment for T-bills to rally," said Brian Smedley, interest rate strategist at Bank of America Merrill Lynch.

Yet the buying binge is dealing a blow to banks and dealers that need T-bills as collateral to borrow short-term loans in the repurchase agreements market, or repos.

http://online.wsj.com/article/BT-CO-20110805-708577.html

[HereSince1628]

1. Fees for the rich is OK, taxes for the rich...not so much.

The banks can't pay interest rates with everyone bailing on their investments?

[Yavin4]

2. Buy Gold and Silver

Why give your money for free to the banks?

[Chimichurri]

3. this bank is not for you and me. It's for the high rollers - the point is the amount of cash coming

out of the market, that the bank doesn't want it.

[Supersedeas]

4. only in the mind of a Banker and a Biz Chick does it make since to charge for

depositing money.

Next, they will charge for standing in line to wait on the teller.

[krispos42]

5. You mean they're not creating jobs with all that untaxed money?

[Chimichurri]

6. Yeah, no. Obama will tax them even less to see if that works.