Banks' New Problem: Too Much Cash

Tuesday, October 25, 2011

BANK OF AMERICA (Flickr: petekraynak)

Banks were in dire trouble back in 2008, when the financial crisis hit. Stalwarts like Bear Stearns and Lehman Brothers kicked the bucket and other banks like Citigroup still haven't fully recovered. It appears though that banks may have a new problem: too much money. Many people, with no safe alternatives, are depositing their money into banks, but the banks have no where to invest it, so they are trying to deter consumers from giving them their money.

Louise Story, Wall Street and finance reporter for The New York Times, explains this unusual problem.

Guests:

Louise Story

Produced by:

David J Fazekas

Comments [5]

amalgam from NYC by day, NJ by night

@ listener - "I thought the government and her agents were the servants to the people and not equal partners."

There was no mention of government as "partner" to the people(wha?) since government is established to serve, but with so much diversity of race, standing, class, values, ideology, etc., whose particular needs (or what constituency, broad or not) is government serving in a given situation?

Feb. 08 2012 10:28 AM
Jonathan from Salt Lake City, Utah

The premise that there's an equivalence between people holding onto cash in banks and banks doing the same is less than moral and compares apples to oranges. People may well hold onto their money and keep it as cash because Wall Street & investment bank greed has screwed over everyone. If banks aren't lending out the cash they have on hand, that's their fault not mine.

If some banks want to charge more fees there's still many options to switch to banks & credit unions that don't. I've already dumped two larger banks relative to credit cards and checking accounts in favor of internet banks and a credit union who are more accommodating. The bottom line is shop around and don't let the evil big guys screw you over. And not everything is equal.

Oct. 25 2011 01:51 PM
listener

Amalgam
Wow...if only you gave the program as much attention as you give me.
I'm flattered.

"We are in the midst of an economic reckoning that is occurring between the government AND its citizens"

I thought the government and her agents were the servants to the people and not equal partners.

Oct. 25 2011 11:00 AM
amalgam from NYC by day, NJ by night

@ listener - I love your posts because I can count on them to promote a simplified, one-sided, right-wing analysis of complex problems, often complete with some wild-eyed rhetoric.

I actually agree that "politicians and regulators" from BOTH parties that have been bought/captured by various industries with vested interests whose lobbyists or corporate proxies (think: ALEC) write laws. (I wouldn't use the term "statist," which is redundant considering that's their employer and whose underlying beliefs can't be imputed.) To wit; politicians, regulators and industry often, but not always (see, qualification), collaborate to protect their narrow interests and power. This is often called crony capitalism.

So sure, mention Dodd, Frank and Durbin, but they're fairly weak regulation (mainly recapitalization) is part of the equation since banks can choose to maximize their profits however they want. Since the financialization of the U.S. economy, banks are not content to simply be the stodgy banks of old but need to squeeze more profits to please shareholders (and execs) ahead of their customers. They have a choice as to whether levy fees. Go ahead, that's not the reason for the economic woes.

The main issues with the poor economy are myriad, knotty, complex owing to a 40-year global restructuring of the world economy (which the U.S. initiated and led), the housing bubble (blown up by left, right, and center), American military adventurism (empire?)the over-reliance on public and private debt, the over-reliance on the financial industry, the lack of strategic direction on energy and natural resources, just to name a few.

The economy is global and complex; simply saying that "progressive statists" are at fault because the "government [is] repossessing currency from citizens" is not only wrong, but insufficient to even explain the situation.

We are in the midst of an economic reckoning that is occurring between the government AND its citizens, which is always two-way flow.

Oct. 25 2011 10:33 AM
listener

There is a disturbing trend here where the odious culprits in the current financial mess is being scapegoated on to first the banks and now the general public who stubbornly insist on protecting their money and using it where they see fit.

Everyone seems to be a problem in not "helping the economy" except the "progressive" statist politicians and regulators who actually were and are the instigators of this mess.

Is it not profoundly dishonest and deliberately misleading to mention banks fees and other regulations without mentioning the names Dodd, Frank and Durbin?

Is this the opening leftist salvo of the government repossessing currency from citizens in order to "help the economy" which means private savings and retirement accounts are no longer safe from the revenue code?

Do citizens run the government or is it now the other way around?

Oct. 25 2011 09:06 AM

Leave a Comment

Register for your own account so you can vote on comments, save your favorites, and more. Learn more.
Please stay on topic, be civil, and be brief.
Email addresses are never displayed, but they are required to confirm your comments. Names are displayed with all comments. We reserve the right to edit any comments posted on this site. Please read the Comment Guidelines before posting. By leaving a comment, you agree to New York Public Radio's Privacy Policy and Terms Of Use.