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No More Free Checking Accounts, Bankers Threaten

Written by Gary North on November 25, 2013

The Financial Times, a British publication, has run an article saying that two unnamed officials at two unnamed large American banks say that any move by the Federal Reserve System to eliminate the paltry interest rate of no higher than 0.25% on excess reserves will lead banks to start charging for free checking accounts.

Excess reserves are accounts held by commercial banks at the Federal Reserve. This money does not enter the economy. This in turn keeps the money from multiplying through the fractional reserve banking system. It keeps price inflation low.

Why couldn’t banks lend this money to businesses? No deal, says one of these unnamed bankers. “It’s not as if we are suddenly going to start lending to [small and medium-sized enterprises]. There really isn’t the level of demand, so the danger is that banks are pushed into riskier assets to find yield.”

Let me interpret this. “Today, four years into the so-called economic recovery, businessmen still are unwilling to borrow money — not even at historically low interest rates.”

Some unnamed Federal Reserve officials have said that the FED can save money by stopping these payments. The response by the two unnamed officials at the unnamed banks is a counter-threat.

“Right now you can at least break even from a revenue perspective,” said one executive, adding that a rate cut by the Fed “would turn it into negative revenue – banks would be disincentivised to take deposits and potentially charge for them”.

There are actually senior banking officials who use the word “disincentivise.” This is a bad sign.

Continue Reading on www.ft.com

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9 thoughts on “No More Free Checking Accounts, Bankers Threaten

  1. Fasten your seat belts

  2. Texas Chris says:

    I hope the buckle on that seatbelt is made of gold or silver.

  3. Both! 2 – tone!

  4. Bob_Robertson says:


  5. Please stop the low-life pop-ups on the websies. Have some freaking class so the movement to get back to a Constitutional Republic can be taken seriously.

  6. But we supposedly had a Constitutional Republic at one time. How has it worked out in the long run? If we, as you say, "get back to a CR, who's to keep it on the straight and narrow? You? Some elected parasite that lives off the stolen money?
    I say let's get rid of the coercive state and build a society in which everyone gets to keep all of their production and no one steals your money or property at the point of a gun.

  7. A Constitutional Republic depends on ab INFORMED and politically ACTIVE citizenry. That is why the enemies of free society ALWAYS start by taking control of education. They CAN'T allow the masses to be informed.

  8. Richard Matthews says:

    I totally agree. Watch out for links that take you to the AARP site!

  9. Think that the banks will "out airline" the airlines, with a new crop of fees, or who is the student v. who is the teacher?