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NIRP Officially Arrives In The US As JPM Starts Charging Fees On Deposits

Tyler Durden's picture




 

Technically, NIRP arrived in the US back in December when as the WSJ reported at the time, America's largest banks at that time urged "some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits." The banks included J.P. Morgan Chase & Co., Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America. However, at the time, the NIRP threat was rather nebulous, with the banks telling clients, which range from large companies to hedge funds, insurers and smaller banks, that they will begin charging fees on accounts that have been free for big customers at some point eventually. Nothing was imminent.

That changed overnight, when as the WSJ once again reported, the nebulous became tangible after J.P. Morgan Chase, the largest US bank by assets (and second largest in the US by total derivative notional) is preparing to charge large institutional customers for some deposits. WSJ adds that JPM "is aiming to reduce the affected deposits by billions of dollars, with a focus on bringing the number down this year.

The details on this latest dramatic, and until central-planning arrived, unthinkable, monetary experiment:

The move is the latest in a series of steps large global banks have been discussing in recent months to discourage certain deposits due to new regulations and low interest rates.

 

J.P. Morgan’s steps are among the most detailed and widespread. Specifics are likely to be unveiled Tuesday by J.P. Morgan executives at the bank’s annual strategy outlook with investors, these people said. Among other points, the bank is expected to stress alternatives customers affected by the deposit moves can use for their excess cash.

 

The plan won’t affect the bank’s retail customers, but some corporate clients and especially an array of financial firms, including hedge funds, private-equity firms and foreign banks, will feel the impact, according to the memo. J.P. Morgan is making the moves because certain deposits are less profitable to handle than they used to be. New federal rules essentially penalize banks for holding deposits viewed as prone to fleeing during a crisis or a stressed environment.

 

“We are adapting to a changing regulatory environment across our company,” according to the J.P. Morgan memo sent Monday and signed by the bank’s asset-management, commercial-bank and corporate and investment-bank heads.

 

...

 

J.P. Morgan is one of the most affected by new capital and liquidity rules, in part because it is one of the largest banks and has a variety of complex businesses, including trading and serving hedge funds. The memo notes that the changes are necessary to deal with clients deemed more interconnected and risky by regulators. In addition to J.P. Morgan’s relationships with hedge funds, foreign banks and private-equity firms, its dealings with central-bank clients could be also affected.

 

Under the bank’s new push, those clients will be asked to adjust certain deposits viewed as more temporary by either paying a new fee or moving the proceeds to a similar J.P. Morgan product such as a money-fund sweep account. In some cases, the bank will likely ask clients to hold these so-called nonoperational deposits at a different firm.

The WSJ punchline: "The moves have thrown into question a cornerstone of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding."

And therein lies the rub, because as the Fed is preparing to raise short-term rates, which most directly affect the cost of deposits to banks (we hardly need to remind readers that the "interest rate" on the general unsecured claim that is a deposit has been ~0.00% for the past 6 years), banks are telegraphing that they have more than enough funding on the liability side of the balance sheet, and that they are comfortable enough with procuring other sources of funding that are not deposits - whose cost of capital may rise if indeed Yellen hikes rates in June - that the entire Fed rate hike process will be moot.

Of course, none of this is new to readers. Recall from April of 2013 our "One-Chart Summary Of All That Is Wrong With The US Financial System: JPM Deposits Over Loans" in which we showed that JPM, together with the other Big 4 deposit-taking TBTF megabanks have about $3 trillion in deposits over loans: the same amount as the liquidity injected by the Fed over the same time period.

 

Last November, the WSJ observed as much when it noticed the relentless increase in bank deposits unaccompanied by a matched increase in loans:

 

So now that the Fed may be finally pushing back on the commercial banks, and telling them that the cost of deposit funding is about to go up, banks themselves are pushing back on the Fed, and signalling that thanks to the trillions in fungible QE liquidity, they don't care if the Fed hikes rates, as they are now proactively seeking to purge deposits from their balance sheets.

Paradoxically, in the New Normal, even the veiled threat that one item of a bank's capitalization may have a non-zero cost of capital, is enough for the bank to do everything in its power to eliminate said cost of funding - i.e., deposits - and replace it with other sources of cheaper funds, mostly emerging from the vastly unregulated shadow banking system.

In any event, NIRP is now officially in the US, which means that one after another US commercial banks will join what has already become a NIRP free-for-all across most of continental Europe where NIRP now reigns supreme, and where trillions in government bonds yield negative rates.

Why all of the above is most amusing is that it was in August of 2012 when none other than staffer of the New York Federal Reserve warned that "If Interest Rates Go Negative . . . Be Careful What You Wish For."

These were some of the highlights of the perverted, broken monetary system that NIRP would unleash in the US as per the Fed's warning from less than 3 years ago:

  • if rates go negative, the U.S. Treasury Department’s Bureau of Engraving and Printing will likely be called upon to print a lot more currency as individuals and small businesses substitute cash for at least some of their bank balances.
  • I might even go to my bank and withdraw funds in the form of a certified check made payable to myself, and then put that check in a drawer.
  • If bank liabilities shifted from deposits to certified checks to a significant degree, banks might be less willing to extend loans, because certified checks are likely to be less stable than deposits as a source of funding.
  • As interest rates go more negative, market participants will have increasing incentives to make payments quickly and to receive payments in forms that can be collected slowly
  • if interest rates go negative, the incentives reverse: people receiving payments will prefer checks (which can be held back from collection) to electronic transfers

And the punchline:

  • we may see an epochal outburst of socially unproductive—even if individually beneficial—financial innovation

In short, things in the already insane monetary realm are about to get a whole lot insane-er. But don't worry, the central banks are in full control.

 

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Tue, 02/24/2015 - 09:30 | 5821958 Ivanovich
Ivanovich's picture

Maybe goldman will be next....wait, where are the Goldman banks again?

Tue, 02/24/2015 - 09:33 | 5821965 Haus-Targaryen
Haus-Targaryen's picture

Aren't these the same guys who won't let you wire transfer more than $50k outside the country per month? 

Tue, 02/24/2015 - 09:34 | 5821973 SickDollar
SickDollar's picture

you did not get the memo

 there are two categories in the financial system:

The sheeple treatment and the rich treatment

 

Tue, 02/24/2015 - 09:41 | 5822015 Took Red Pill
Took Red Pill's picture

I will happily move my money out of the banks. Already have pulled most of it!

Tue, 02/24/2015 - 09:50 | 5822047 TruthInSunshine
TruthInSunshine's picture

We're just about done here.

This is a concrete, clear & unambiguous sign that the next crisis really is close at hand, given how much central bank policy has distorted not just price discovery, normative historical economic metrics, but underlying functions/mechanism of the implicit agreements that form the cornerstone of society.

We will have a repeat of the dot.com/tech sector bust (with profit-less -and often revenue-less "startups" - now being valued in the billions) tied together with another RE bust (not as broad as 2008, and focused more on dispossession versus loss in value) tied together with busts in commodities, and, the big Mac Daddy, the corporate bond bust (which will have massive follow-on ramifications for both equities and the general financial sector).

Central bank policies across the developed AND emerging market world have now set the table for the next chain of dominoes to fall.

Tue, 02/24/2015 - 09:53 | 5822060 LawsofPhysics
LawsofPhysics's picture

Yes, resulting in even more government intervention(fascism/cronyism) and war.

Interesting times indeed.

Tue, 02/24/2015 - 10:09 | 5822121 y3maxx
y3maxx's picture

It will be unsurprising now to see an Archduke Ferdinand moment very soon...

Tue, 02/24/2015 - 10:13 | 5822142 BigJim
BigJim's picture

I think this sends a VERY clear message to get out of PMs (especially physical held outside the banking system) and buy dollars.

Sell, sell, sell, sheepie-weepie!

 

Tue, 02/24/2015 - 10:23 | 5822181 Soul Glow
Soul Glow's picture

Yeah, sell the gold your grandpa gave your for cash and put it in unallocated accounts at JPM.  Fuckin' genius sheeple!  Genius!

Tue, 02/24/2015 - 10:34 | 5822229 pods
pods's picture

So banks lend against deposits.  Deposits leave banks. Banks lend _____?
This is going to end well.

Again the muppets will take it right in the poopchute.  Being charged to lend the banks money, who then charge the muppets again when they (create and) lend agianst those deposits.

Good to be a bank.

pods 

Tue, 02/24/2015 - 10:55 | 5822315 chubbar
chubbar's picture

I'm pretty sure (don't have a link) that Greenspan cut the tie between deposits and lending several years back so that the 10 to 1 fractional reserve requirementt we all learned about in school is no longer in force. I "think" that banks can lend without a tie to reserves. Hell, they just do a bookkeeping entry, securitize it, hypothecate it and make sure the gov't picks up the risk at this point in the ball game. The whole system is a house of cards.

Tue, 02/24/2015 - 12:54 | 5822730 pods
pods's picture

I think it was Bernankestan that lowered the reserve requirement but idk.

Who really knows anymore. I am seriously waiting for Morpheus to give me a quick note on the computer to get the hell out of this powerplant.

-Coppertop

Tue, 02/24/2015 - 10:21 | 5822173 holdbuysell
holdbuysell's picture

With nothing more than history as a guide, I'm going with the seven year cycle of the Shemitah year which has gone bang every time over several generations.

Circa September 13, 2015.

Let's see.

Tue, 02/24/2015 - 10:26 | 5822196 new game
new game's picture

buysellhold; agreed, year of blood in the streets.

Tue, 02/24/2015 - 13:14 | 5822785 JRobby
JRobby's picture

A person I know who runs a pretty successful cafe told me Wells charges a service charge to take larger cash deposits. He did not say how large. Assume $5000+. He did not seem to understand or be bothered by the ramifications of it.

Amazing

Tue, 02/24/2015 - 16:26 | 5823682 nailgunnin4you
nailgunnin4you's picture

This is a concrete, clear & unambiguous sign that the next crisis really is close at hand

 

Yep, global markets implode tomorrow zerohedgers called it! aaaaaaarrrrrggghhhhh

Tue, 02/24/2015 - 09:51 | 5822050 SoilMyselfRotten
SoilMyselfRotten's picture

NIRP Translated: we are making so much money leveraging the govt free money we don't need it from you schmucks

Tue, 02/24/2015 - 09:54 | 5822062 TruthInSunshine
TruthInSunshine's picture

Yep.

Why would any institution want "deposits" when they can raise as much fiat money as they wish by selling bonds/debt at whatever Treasuries are paying + a few measly basis points, especially when they're too big to fail?

Tue, 02/24/2015 - 10:17 | 5822159 SofaPapa
SofaPapa's picture

And yep, the process of divorcing "money" from any concept of collateral or productive capacity takes another step forward.  As soon as J6P catches on to the fact that money is no longer related to anything of tangible value, look out...

Tue, 02/24/2015 - 10:25 | 5822189 GMadScientist
GMadScientist's picture

Me: still breathing in the meantime.

Tue, 02/24/2015 - 11:46 | 5822552 A Nanny Moose
A Nanny Moose's picture

You presume that J6P understands the concept of money. They do not. after all, gummint educated them. Gummint will fuck it up again, and J6P will simply accept the offered strawman, and call for more gummint action.

Tue, 02/24/2015 - 14:02 | 5822982 SofaPapa
SofaPapa's picture

Actually, I was moving ahead of myself further than that.  My point is more that at some point, this monetary experiment gets out of control, and the real economy gets involved.  When prices go out of control on the street level, escaping the "financial" black hole where they have currently been contained, then the game changes.  You are absolutely right that J6P is even then not going to understand what the hell is going on, but when they cease to be able to get the necessities in a predictable manner, they will react, and that reaction will not be pretty.  

As to what GMadScientist said above, I do agree that I am getting ahead of things here.  I also will not hold my breath for this to happen.  It's going to take a while more.  But when it does happen, history suggests it's going to happen fast.  And for those who didn't see it coming at all, it will seem instantaneous.  People on here have been watching "it" happen for years, so it won't seem that strange, but most don't have the inclination to watch this shitshow unfurling.

Tue, 02/24/2015 - 10:16 | 5822152 shouldvekilledthem
shouldvekilledthem's picture

If you use fiat then you are still a slave.

Tue, 02/24/2015 - 10:26 | 5822188 TruthInSunshine
TruthInSunshine's picture

Any too-big-to-fail/too-big-to-prosecute institution, such as JPM, uses fiat money to enslave others, just as all the other Fed's handlers do.

Tue, 02/24/2015 - 09:35 | 5821981 dufferin
dufferin's picture

Are Muslims responsible for this as well?

Tue, 02/24/2015 - 09:38 | 5821995 Ivanovich
Ivanovich's picture

No, not this time.  This one is Bush's fault.  

Tue, 02/24/2015 - 09:40 | 5822007 Haus-Targaryen
Haus-Targaryen's picture

I thought it was those Constitutionalists and those terrorists who believe in the Bill of Rights. 

Tue, 02/24/2015 - 09:56 | 5822068 giovanni_f
giovanni_f's picture

Not to forget all those unpatriotic gold hoarders betting on the decline of America.

Tue, 02/24/2015 - 10:05 | 5822111 Clarabell
Clarabell's picture

Are you kidding me? Everyone knows this is Putin's fault!

Tue, 02/24/2015 - 10:14 | 5822134 giovanni_f
giovanni_f's picture

Using the insider information the traitor Eward Snowden handet out to Russia.

Tue, 02/24/2015 - 10:18 | 5822162 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

No... something this devious is the fault of a lone-wolf, right-wing extremist.

Tue, 02/24/2015 - 10:58 | 5822326 Panafrican Funk...
Panafrican Funktron Robot's picture

Guys, this is obviously the work of Waddell and Reed. 

http://en.wikipedia.org/wiki/Waddell_%26_Reed#Publicity_related_to_.22Flash_Crash.22_on_May_6.2C_2010

They sold 75,000 emini contracts in a single day.  That's, like, almost 4% of an average trading day volume.  Terrorists.

Tue, 02/24/2015 - 09:43 | 5822011 GetZeeGold
GetZeeGold's picture

 

 

Are Muslims responsible for this as well?

 

Haven't you heard.....they aren't responsible for anything.

 

How to shutdown a "peaceful" Muslim...don't behead the messinger.

https://www.youtube.com/watch?v=cAoXgZLRee0

Tue, 02/24/2015 - 10:03 | 5822101 new game
new game's picture

usery is against da ritual. negative oil rates though...

Tue, 02/24/2015 - 10:21 | 5822167 Ghordius
Ghordius's picture

you are OT, with your Muslim idiocies

if you want to find only one culprit, then you don't need to go further then the abolishment of the Glass-Steagall Act, in 1999

-------------

I am a Christian, specifically a Catholic. there is something like one billion of us. am I responsible for every idiocy that is done by some Christians, or in the name of Christ?

in the same way, why are you trying to say that one billion Muslims is responsible for every idiocy that is done by some Muslims, or in the name of Islam?

only because that idiot in the White House has said something about it? my goodness, some of you Americans take partisanship really seriously, don't you?

your George W. Bush should be waterborded, in my opinion. nevertheless, I would never go as far as saying that he did not say something right, in between of his idiocies

sheeeshhh

Tue, 02/24/2015 - 10:28 | 5822201 GMadScientist
GMadScientist's picture

Did you give them money? Then yes, you are somewhat culpable.

Fuck waterboarding...drop Cheney, Rummy and the rest somewhere West, South, East, or North of Tikrit.

Tue, 02/24/2015 - 10:28 | 5822205 knukles
knukles's picture

See, if you guys hadn't started the Crusades than Luther wouldn't have put the dress code on the cathedral door telling the Muzzies to uncover their faces to make deposits and withdraws and none of this would have happened.

(Methinks most of us Yankee Dogs are tremendously weary of the war on Christians and praise constantly heaped upon the Religion of peace by official (offal) sources.... might be a cause for such comments so take it accordingly.  Likewise, approximately 50% of folks don't have a clue as to Ynohos religion no give a rat's ass, another 20% figure he's a Christian 30% think he's a muzzie and another 7% think he's a commie.  And besieged daily by the MSM about this shit within the Hegelian Dialectic)

Tue, 02/24/2015 - 13:20 | 5822806 Icelandicsaga.....
Icelandicsaga...............................................'s picture

Knuckles.. you dah man.

Tue, 02/24/2015 - 10:57 | 5822323 Real Estate Geek
Real Estate Geek's picture

+1 just for the GWB waterboarding proposal.  (And since it's two-fer-Tuesday, let's not forget Chalkie.)

Tue, 02/24/2015 - 09:46 | 5822025 Pure Evil
Pure Evil's picture

Yes, its the muzzies fault.

Time to bomb, bomb, bomb, .......bomb, bomb, bomb Iran.

Tue, 02/24/2015 - 10:23 | 5822183 Ghordius
Ghordius's picture

Pure Evil, something you might like that I heard yesterday: "it's difficult to bomb Iran... without hitting Iranian Jews". Enjoy

Tue, 02/24/2015 - 09:59 | 5822082 Grinder74
Grinder74's picture

Yes, because paying/earning interest is forbidden by the Pedophile Prophet(TM).

Tue, 02/24/2015 - 10:15 | 5822147 BigJim
BigJim's picture

Let's not forget what the Talmud says about pedophilia, shall we?

Tue, 02/24/2015 - 09:36 | 5821985 GMadScientist
GMadScientist's picture

Bank Holding Company...

Tue, 02/24/2015 - 09:52 | 5822056 Sir SpeaksALot
Sir SpeaksALot's picture

this is all very simple just buy physical gold or silver. why the hell keep deposit in a bank anyway?

 

Tue, 02/24/2015 - 10:02 | 5822093 new game
new game's picture

not seeing fees at my credit union, actually paying 2 percent on first 10k, about 17/month. combine that with 50/month saving on gas and there is goes to, guess, ???

food...

Tue, 02/24/2015 - 09:32 | 5821966 LawsofPhysics
LawsofPhysics's picture

Good, i was waiting for the opportunity to take out a billion dollar loan and have JPM pay me to do it.

"winning"

Tue, 02/24/2015 - 09:32 | 5821967 Thirst Mutilator
Thirst Mutilator's picture

BTFATH muppets

Tue, 02/24/2015 - 09:39 | 5822002 Luckhasit
Luckhasit's picture

Damn, you beat me to it! Oh well, STFS!

Tue, 02/24/2015 - 09:34 | 5821972 EscapeKey
EscapeKey's picture

Perpare for the senior tranched collateralized re-hypothecated credit default swap.

Tue, 02/24/2015 - 09:37 | 5821990 GMadScientist
GMadScientist's picture

S&P and Fitch give it a AAA.

Tue, 02/24/2015 - 09:40 | 5822006 Luckhasit
Luckhasit's picture

What about Moody's?

Tue, 02/24/2015 - 09:45 | 5822024 Handful of Dust
Handful of Dust's picture

They'll get moar desperate as the correction widens and deepens:

 

 

Yale's Robert Shiller: 'This Is the Most Dramatic Housing Slump We've Ever Had'

http://www.newsmax.com/finance/StreetTalk/Robert-Shiller-housing-slump-e...

 

Tue, 02/24/2015 - 09:50 | 5822045 Pure Evil
Pure Evil's picture

They just haven't imported enough illegal OTM's yet.

If printing unlimited amounts of money won't revive the economy.

And, importing millions of illiterate 3rd worlders has so far been unable to revive the economy.

Then, folks, its time to double down and print more money and import millions more 3rd worlders, especially the good folks from Somalia.

Tue, 02/24/2015 - 10:17 | 5822155 new game
new game's picture

hsg is driven by rates. with zirp and nirp and gov.org controlling rates the same shit chugs down the tracks...flat lined by having to have real income which is flat or lower, but rates going lower to keep the main locomotive on the tracks(treasuries). no need to get any shorts in a bundle. rent if you choose. to each his or her own. i see lower rates equating to a long term hedge as long as you buy smart-home that is constructed properly, preferable built by myself...foam, baby foam...

Tue, 02/24/2015 - 10:39 | 5822245 10mm
10mm's picture

Housing is dead, just like the Baltic Index.

Tue, 02/24/2015 - 10:02 | 5822096 GMadScientist
GMadScientist's picture

AAAA

Tue, 02/24/2015 - 10:25 | 5822193 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Is that the sound of Warren Buffet when he farts in his bathtub?

AAAAAAAAAAAAAA.... AAA........... A.

Tue, 02/24/2015 - 10:29 | 5822210 GMadScientist
GMadScientist's picture

Ask Maria Bartiromo.

Tue, 02/24/2015 - 11:48 | 5822458 813kml
813kml's picture

Moody's rates Uncle Warren's fart bonds at AAAA+.

Tue, 02/24/2015 - 09:56 | 5822072 EscapeKey
EscapeKey's picture

Well then their new invention, the [scheduled tapered offshore offered geared equity] - or STOOGE for short - is worth at least AAA+.

Tue, 02/24/2015 - 10:22 | 5822177 GMadScientist
GMadScientist's picture

And the ever popular CDO version STOOGES(quared).

Tue, 02/24/2015 - 09:34 | 5821975 kowalli
kowalli's picture

Hooray, Freedom from money.

Tue, 02/24/2015 - 09:35 | 5821980 Last of the Mid...
Last of the Middle Class's picture

They're just opening the door for iBank. I'm sure Apple will figure that one out. Wallyworld has their own bank now too ya know. Pay their employees in debit cards.

Tue, 02/24/2015 - 09:38 | 5821994 GMadScientist
GMadScientist's picture

That used to be know as 'scrip'...and only accepted at the company store.

Tue, 02/24/2015 - 09:37 | 5821987 nightwish
nightwish's picture

Fuckers get all the zero interest money they want, why do they need to store our intrinsically worthless paper as well?

We all need to own gold somehow, someway

Tue, 02/24/2015 - 09:39 | 5822000 Monetas
Monetas's picture

The next think they do .... they'll tax the air we breathe .... oh, wait (famous ZH wussism) .... they already do that .... with the cigarette taxes !

Tue, 02/24/2015 - 09:40 | 5822009 surf0766
surf0766's picture

When do we see bank runs?

Tue, 02/24/2015 - 10:27 | 5822198 Albertarocks
Albertarocks's picture

That's exactly it.  The biggest fear banks have is a "run on the bank".  A "run" would instantly put most modern banks into immediate crisis... and yet that's exactly what they are going to get.  They are trying to force customer money out into the economy because they have absolutely no interest in lending these days.  They aren't even true banks anymore and haven't been for the past 10 years at least.

It would be great if all these commercial customers said "Fine.  Fuck you.  We would like to withdraw our entire account please.  Have it delivered to our offices where it will be stored much more safely.  Have it there by 4:00 p.m. today you cocksucker."

That would be the end of that particular bank... one more dead bank put out of its misery... a bank that offers society absolutly nothing and that nobody needs.  BAM.  BOOYAH.  GOOD BYE.  FUCK YOU. 

Tue, 02/24/2015 - 10:32 | 5822221 LawsofPhysics
LawsofPhysics's picture

I think that behind the scenes, in real terms, this has been happing for some time already.  All the big players I know have the majority of their wealth in the Cayman islands...

Tue, 02/24/2015 - 10:46 | 5822281 gimme soma dat
gimme soma dat's picture

Except that most bank branches only keep just barely enough money on hand to operate.  One customer could clear out the vault.  Branches would close in the event of a "bank run."

Tue, 02/24/2015 - 10:30 | 5822214 Chupacabra-322
Chupacabra-322's picture

Never, as the Sheeple don"t have any savings. 

Tue, 02/24/2015 - 09:42 | 5822016 tarsubil
tarsubil's picture

I got a letter from Chase saying they'd pay me $300 to open a checking account with them. So are they planning on taking that back and more through NIRP? Crazy days.

Tue, 02/24/2015 - 09:46 | 5822033 NoWayJose
NoWayJose's picture

On small accounts they will charge you for checks - and collect all of your personal information to sell.

Tue, 02/24/2015 - 09:47 | 5822035 duo
duo's picture

There's been a BAC ATM at the grocery store down the street for 20 years.  It disappeared last week and a ghetto ATM (non-bank with $8 fees) appeared in its place.  WTF?  Of course the thousand people that live in the apartments within a block or two will now have to get in their cars to make deposits, and I have no reason to visit this store anymore.

Tue, 02/24/2015 - 09:42 | 5822017 SheepDog-One
SheepDog-One's picture

Actual customer deposits are troublesome for TBTF parasite banks....free money, and only free money please!

Tue, 02/24/2015 - 09:48 | 5822038 NoWayJose
NoWayJose's picture

Deposits = Liabilities in today's world!

Tue, 02/24/2015 - 10:35 | 5822232 swmnguy
swmnguy's picture

Well, actually Deposits are unsecured loans from depositors to the bank, which don't really have to be repaid in a "credit event."  But yeah, liabilities in principle.

Tue, 02/24/2015 - 10:48 | 5822295 Hubbs
Hubbs's picture

Kind of like lawyers who take on personal injury READ Medical Malpractice Cases cases that are slam dunk winners for them, take their 33 1/3 % of a settlement claim without even having to file a formal complaint.

Tue, 02/24/2015 - 09:42 | 5822018 stateside
stateside's picture

Yes the central banks are in full control - hence the low gold price.  Only when faith is lost in the central banks will the gold price begin to rise.  Nothing to do with hyper-inflation, war, etc.  It's ONLY about faith in central banks.  Tell me when that faith begins to crack and I'll tell you when to go long gold.

 

stateside

Tue, 02/24/2015 - 10:02 | 5822091 LawsofPhysics
LawsofPhysics's picture

Once the faith in fiat is lost, then things get interesting, not before.

Remember there is no monetary, fiscal, or political solution to scarcity...

Seems humanity did stop evolving after all...

Tue, 02/24/2015 - 10:03 | 5822103 GMadScientist
GMadScientist's picture

About three days after the lights go out.

Tue, 02/24/2015 - 10:22 | 5822175 new game
new game's picture

full control

oil=50

gold=1200

dow=18000

s&p=2100

seems as though.

is gdxj down 90 percent? nope just 78 percent, waiting patiently...

Tue, 02/24/2015 - 09:43 | 5822022 armageddon addahere
armageddon addahere's picture

If bank accounts return 0 interest and are subject to "bail ins" and bankruptcies where is the down side to keeping your savings in gold and silver?

Tue, 02/24/2015 - 09:53 | 5822059 Pure Evil
Pure Evil's picture

Other than repetitive boat accidents, its all good.

Tue, 02/24/2015 - 10:20 | 5822169 negative rates
negative rates's picture

The manipulated mkts in London is where. There is no safe hiding place anymore, prep bitches, the end is near.

Tue, 02/24/2015 - 10:34 | 5822224 new game
new game's picture

got a newer and moar powerfull motor for da boat. does that count towards anything?

faster deposits and withdrawls, ha...

Tue, 02/24/2015 - 11:44 | 5822539 FreeShitter
FreeShitter's picture

De alliance be at de gates............

Tue, 02/24/2015 - 09:45 | 5822027 DirtyGreek
DirtyGreek's picture

Why is this news? BMO has been charging me for making cash deposits into my business account for years now. I told them on a few occasions on how insulting it is to charge me to put money into their bank,only to lend it out to someone else and charge them interest on it. They told me 'thats how it is and if you dont like it...'

Tue, 02/24/2015 - 09:49 | 5822040 GMadScientist
GMadScientist's picture

It's not the lending out of my deposits I find disturbing as much as the fact that they're doing it 40X with the same deposits.

Tue, 02/24/2015 - 09:45 | 5822029 Monetas
Monetas's picture

Hey, let's prime the pump .... with some gratuitous up votes .... here, I'll show you how !

Tue, 02/24/2015 - 09:47 | 5822037 blindman
blindman's picture

banks don't do banking anymore,
they do command and control of
the different
aspects of the realms.

Tue, 02/24/2015 - 09:48 | 5822039 yogibear
yogibear's picture

Banks are telling everyone they don't need your money. So take it out and buy assets. Make the cash disappear. The CB's can keep all their member banks alive.

Any signs of normalization are long gone. 

It's just the mattress and assets now. The goal all along is to monetize debt.

Tue, 02/24/2015 - 09:49 | 5822043 TalkToLind
TalkToLind's picture

Gold Bitchez!

Tue, 02/24/2015 - 09:50 | 5822044 GMadScientist
GMadScientist's picture

Man are they gonna feel silly when people don't spend that cash and instead pay down debt to the same banks insulting their intelligence today.

Tue, 02/24/2015 - 09:50 | 5822046 rwe2late
rwe2late's picture

what?

New federal rules essentially penalize banks for holding deposits viewed as prone to fleeing during a crisis or a stressed environment.

 

Any deposits I would have in a bank would meet that description.

So, does this mean the days of free checking

(at local banks and credit unions) are on the way out ?

Tue, 02/24/2015 - 09:52 | 5822054 yogibear
yogibear's picture

"Only when faith is lost in the central banks "

In western central banks.

A good opportunity for a eastern country to step in and announce a gold backed currency.


Tue, 02/24/2015 - 09:52 | 5822055 NoWayJose
NoWayJose's picture

Thanks to the Fed, 50-to-1 leveraged bets against gold are 'safer' than deposits!

Tue, 02/24/2015 - 09:58 | 5822071 yogibear
yogibear's picture

Next step is for banks to start seizing 10% on all accounts.

Your money has become theirs.

You signed papers allowing it when you opened up an account.

Little by little they are expanding their powers. 

Tue, 02/24/2015 - 09:58 | 5822078 okyoureabeast
okyoureabeast's picture

While I love ZH, this is hardly ZIRP. Call me when they start charging fees on insured deposits. 

Tue, 02/24/2015 - 10:25 | 5822187 negative rates
negative rates's picture

They already did, unless you have a car and bank at an atm, or a direct deposit account, you are getting charged to deposit money if your account ever drops below the $700 limit. 

Tue, 02/24/2015 - 18:08 | 5824130 blindman
blindman's picture

the term "inflation targets" comes
to mind.

Tue, 02/24/2015 - 09:58 | 5822080 sidney sloth
sidney sloth's picture

Money has never been worth anything to the man who doesn't believe it is worth something to someone else.

Put another way, if i can swap it for something else with someone else, I'll take it from you. Who cares if it is "real"?

As long as there is a sucker who knows some suckers, money has a bright future. 

Hope springs eternal.

Tue, 02/24/2015 - 09:59 | 5822081 Monetas
Monetas's picture

The "Middle Man" (aka the bank) .... takes a little from both sides .... the depositer .... and the borrower .... and you thought they were working for you ?

Tue, 02/24/2015 - 10:05 | 5822084 TalkToLind
TalkToLind's picture

You know I wouldn't put it past these numbnuts to start charging for credit card payments too.  They can't have the proles out there thinking that they can actually pay down their debt.  

Tue, 02/24/2015 - 10:05 | 5822107 GMadScientist
GMadScientist's picture

That would work. Once.

Tue, 02/24/2015 - 10:05 | 5822108 H. Perowne
H. Perowne's picture

Please don't give the financial crystal meth addicts any more ideas.

Tue, 02/24/2015 - 10:02 | 5822090 RaceToTheBottom
RaceToTheBottom's picture

I think that we should be go back to the historical version of money.  

Remove the probalistic version of money where it is multiplied by 100s with the hope that people won't need it at one time...

Tue, 02/24/2015 - 10:03 | 5822099 MEFOBILLS
MEFOBILLS's picture

Why don’t we shit-can the private credit system?  It has outlived its usefulness.  It was built up ad-hoc, and was a con-job from the beginning anyway.  Humans can build nuclear weapons make great art, yet they are stuck in a stone-age predatory banking system?  In turn this system predicates our behavior?  The money power controls humanity.  How stupid are we?  This stupidity is monumental, and will likely be our undoing.

When you go to the bank to make a loan, bank creates this credit based on your signature.  It is your credit actually, not the banks.  That credit then goes out into the money supply when you spend it.  Others then use it while it remains in supply.  Therefore, and this is important, money is a commons.

Since it is a commons, it is a public good.  Yet, you create it, and yet private banks control its issuance based on a profit motive.  This is a serious mismatch of types, and the real root problem.

We should at least be running monetary experiments on small scale somewhere?  Why not?  Because, the money powers are entrenched and if anybody does anything to threaten their rent taking, they will resort to extremes, including nail guns to the head.

Allowing private corporations to issue your credit, and the countries credit is a serious mistake. 

Thomas Jefferson – his most fervent wish, after a lifetime of learning and experience wanted a do-over.  What do-over exactly?  He wished that if could re-do ONE thing, it would to disallow government from borrowing its own credit. 

www.sovereignmoney.eu

Tue, 02/24/2015 - 10:07 | 5822120 GMadScientist
GMadScientist's picture

"Corporations are going, we are told, to destroy the country. But what would this country be but for corporations? Who have developed it? Corporations. Who transact the most marvelous business the world has ever seen? Corporations." - Jay Gould, Robber Baron

Tue, 02/24/2015 - 10:27 | 5822199 negative rates
negative rates's picture

Who privatizes the profits and socializes the losses? Corporations.

Tue, 02/24/2015 - 10:38 | 5822242 Chupacabra-322
Chupacabra-322's picture

The City of London.  Thats who.

Tue, 02/24/2015 - 10:09 | 5822125 Usurious
Usurious's picture

 

 

Interest free credit!!!!!!!!!!!!!!!!!

Tue, 02/24/2015 - 10:06 | 5822117 Panic Mode
Panic Mode's picture

I can see compound outerest works very well for the bank.

Tue, 02/24/2015 - 10:23 | 5822179 Smegley Wanxalot
Smegley Wanxalot's picture

Yeah, ha, I bet they'll be compounding by the millisecond once NIRP is part of the interest rate you pay on deposits.

Tue, 02/24/2015 - 10:16 | 5822151 Catullus
Catullus's picture

Under a gold standard, you get NIRP as well. Meaning, they don't pay you interest and they charge you a fee to hold your gold. It's effectively a negative interest rate.

But here's the difference, I'm paying the bank to hold my gold in a building, store it, account for it, and deliver it back to me immediately. That costs money. I understand. Charge me money to pay your capital costs for storage.

And under these 1s and 0s fiat money, the storage costs are not zero, but they're very very very low. The difference is that I don't expect the bank to loan my money out if it's a gold standard. Everyone knows the banks are loaning money out in the commercial accounts.

If they're not making enough money on the commercial accounts, it's obvious what needs to happen. There's no need to think that this is a source of funding for commercial loans. SO... just increase the reserve rate requirement. Make it 100% on all deposits. And you don't need the government to do this. Just say "THIS IS A 100% RESERVE ACCOUNT. THE MONEY YOU PUT IN DOES NOT GET LOANED OUT AND IS NOT THE ASSET OF THE BANK. THE FEE SCHEDULE IS ATTACHED."

If I'm a CFO and accruing employee bonuses throughout the year in my company's account, I'm putting it in the 100% reserve fund. These people need to get paid. And I'm going to lower my risk as much as I can to make sure that happens. There will be a demand for these things.

Tue, 02/24/2015 - 10:17 | 5822154 shouldvekilledthem
shouldvekilledthem's picture

Bitcoin users are not affected. :)

Tue, 02/24/2015 - 10:18 | 5822158 cn13
cn13's picture

I can't figure out why anyone would keep their money on deposit with JPM or any other "too big to fail" bank.

Not only are you sponsoring their financial terrorism, but you could easily see your funds evaporate overnight.

JPM is the bank that withheld margin funding and blew up MFGlobal and Corzine's along reputation with it.

And don't forget JPM also laundered illegal funds for Madoff amongst a million other financial crimes they have committed.

I have my money with a credit union and couldn't be happier. 

Tue, 02/24/2015 - 10:21 | 5822172 Soul Glow
Soul Glow's picture

The right thing to do here is keep your cash in the bank and do whatever they tell you because it is actually their cash not yours as despoists are UNALLOCATED.

Good luck soviets.

Tue, 02/24/2015 - 10:26 | 5822186 cn13
cn13's picture

The U.S. government needs to quit wasting so much time and money chasing around an enemy that we can't even define in the Middle East.

The government instead needs to focus on domestic threats and JPM with their derivative portfolio pose as far bigger danger to the U.S. than terrorists abroad.

Jaime Dimon and the JPM banksters are the terrorists the U.S. needs to be most concerned about.

Tue, 02/24/2015 - 11:17 | 5822394 Smegley Wanxalot
Smegley Wanxalot's picture

Didn't you get the DHS/NSA release last week?  People who believe in liberty, individual sovereignty and who keep little money in banks while taking steps toward self-sufficiency are the domestic terrorist threat.  Not the bankers.

So that means you and me.  We are the horrible threat to the nation and the world, because we don't want to play JPM's game.

Tue, 02/24/2015 - 11:44 | 5822537 rejected
rejected's picture

People are so well 'programmed' you can't beat that into them with a stick. All you get is that dull stare.... They've been lobotomized and don't know it.

Tue, 02/24/2015 - 10:31 | 5822215 pine_marten
pine_marten's picture

So you don't get a free toaster when you open an account anymore?

Tue, 02/24/2015 - 10:31 | 5822217 holgerdanske
holgerdanske's picture

You must be deaf dumb and blind not to buy gold.

Anyone that can't see this is completely unsustainable must be mad. We are paying th banksters for looking after the toilet paper they have let us have?

 

Must be mad!

Tue, 02/24/2015 - 10:46 | 5822285 Free Wary
Free Wary's picture

We should call it NNIRP, (Negative Nominal Interest Rate Policy), because we have already been dealing with NRIRP (Negative Real Interest Rate Policy) for quite some time.

 

 

Tue, 02/24/2015 - 10:47 | 5822291 hendrik1730
hendrik1730's picture

If one will have to pay for depositing your money in a bank account, why do something this silly? BANKRUN !! And buy gold ( physical ), that is also ZIRP but at least retains its value.

Tue, 02/24/2015 - 10:58 | 5822327 Free Wary
Free Wary's picture

I already ran. I traded my cash for a huge flock of chickens. Chickens are a great form of money.

Tue, 02/24/2015 - 12:43 | 5822697 2muchtax
2muchtax's picture

I thought the same way...but I have a bear problem ( actually at least 4 bears). They eaten at least 30 chickens. I guess the bears are like bankers.

Tue, 02/24/2015 - 23:04 | 5825271 Free Wary
Free Wary's picture

get an old copy of 'Joy of cooking". It has complete instructions what to do with bear fat and great recipes etc.

 

Bear doesn't taste like chicken.

Tue, 02/24/2015 - 10:49 | 5822297 RabbitChow
RabbitChow's picture

This is all being set up to be a slow-moving Cyprus.  The bank gets their biggest customers to depart, making the bank more unstable, and the little guys are left.  The bank seizes the little guys' deposits and tell them to fill out your FDIC claim forms so you can get reimbursed whenever the FDIC actually has money to hand out.  Oh, you'll likely get 10 cents on the dollar given a 10 percent reserve deposit requirement.  My inclination would be to move all the money out to a safe at one's house, or if you wish to continue banking, choose a credit union (who are insured by a different private organization similar to FDIC, and credit unions are actually outside the Federal Reserve System.)

Tue, 02/24/2015 - 10:59 | 5822329 bluskyes
bluskyes's picture

Shouldn't this cause liquidity to evaporate as people remove their cash from bank accounts?

Tue, 02/24/2015 - 11:21 | 5822433 RabbitChow
RabbitChow's picture

Absolutely

Tue, 02/24/2015 - 11:39 | 5822518 rejected
rejected's picture

[The memo notes that the changes are necessary to deal with clients deemed more interconnected and risky by regulators.]

[ because certain deposits are less profitable to handle than they used to be. New federal rules essentially penalize banks for holding deposits viewed as prone to fleeing during a crisis or a stressed environment.]

 

Now who made deposits "less profitable" and "Risky" How does a well managed bank become better with less assets? Insanity runs amuck in this country.

How about these money changers take their play money and shove it up their wahoo. The smell emanating from the banking institutions is so bad even plugging your nose can't eliminate. 

Tue, 02/24/2015 - 14:53 | 5823211 Icelandicsaga.....
Icelandicsaga...............................................'s picture

Protect yourself .. screw the banks .. .the argument that THEY are teh financial system is part of the problem.. until the current system goes down . not reformed.. goes down .. we .. in the West will slowly bleed to death on many levels... Rome did not fall over night .. it took decades  it was a process that included over extension of empire, debasement of currency .. failure to control its borders .. migration and corruption of the institutions ... loss of what it meant o be ROMAN citizens .. it was a full century before the barbarians had ROME completely ..   .. and all its 'stuff' .. in our era... . powers that be propping up this pile of dung can only go on so long before it crashes taking everyone who is not prepared down with it.... the debasement of society .. .migration from the third world .. corruption and weakness of the citizens .. ..in many ways we are Rome ... . Complex systeems that become more complex over time .. are not sustainable . we are at that juncture.

Tue, 02/24/2015 - 22:38 | 5825181 Rhal
Rhal's picture

of course they charge for deposits. If you take a suitcase full of dollars to any casino in Vegas, they will charge you a vaulting fee too. Of course they all have thier own plans for your $...

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