Big Banks Punish Savers With Pathetic Interest Rates Despite Fed Hikes

Big banks such as JPMorgan, Wells Fargo, Citigroup and Bank of America have been shafting depositors with terrible interest rates - refusing to keep pace with the Federal Reserve's rate hikes.


That's why he is richer than you .

JPMorgan, for example, has only raised its average deposit rate by 0.21 of a percentage point, despite the Federal Reserve raising rates by 1.25% over the same period - effectively punishing customers by locking them into historically low rates required to bail out the same banks which caused the financial crisis a decade ago.

The trend is so remarkable that analysts at Goldman Sachs Group Inc., a rival Wall Street firm with a comparatively tiny banking franchise, published a report on the matter earlier this month, noting that rates on savings were "virtually untouched" in 2017, even as banks charged fatter payments on loans and other assets whose rates jumped along with the Fed's increases.

Consequently, a decade after the 2008 crisis, retirees and others who shun stocks and choose less volatile, government-insured savings accounts at big banks are still getting meager returns. -TheStreet

"Some of the big banks literally have not moved deposit yields higher at any time during this cycle of Fed rate hikes," said Greg McBride, the chief financial analyst at BankRate.com, which tracks the savings and lending industry.

In fact, none of the Fed's three rate hikes noted by Goldman were passed on to savers at JPMorgan, Bank of America and Wells Fargo, with Citigroup passing along just 4% of the rate increases, or 0.03 of a percentage point. 

Goldman's takeaway? Shareholders in big U.S. banks are "not to worry," Goldman wrote in the Jan. 8 reports. "Large banks are still raising cheap funds."

To review; Home lenders and "too big to fail" banks conspired with lawmakers to remove the Glass Steagall act, allowing banks to commingle investment and retail banking operations and making them "too big to fail." Said banks then went on a drunken lending spree as politicians like Barney Frank pushed affirmative-action lending practices, while insisting that Fannie Mae and Freddie Mac were in great shape. This was very disrespectful to the stability of America's financial institutions. 

Of course, in order to keep banks alive, the Fed had to use trillions of taxpayer dollars  and drop it's target rate to a historically low zero percent to avoid what Ben Bernanke and Hank Paulson warned Congress was sure collapse were they not to act quickly. 

And now - the same banks which created the crisis and then took taxpayer money during the crisis, refuses to reward savers now that the crisis is "over" (until it's not) - driving up profits as they use the cheap deposits to fund loans written at the new, fed-hiked rates.

Partly as a result, JPMorgan's net interest income - the difference between what it makes on loans and other interest-earning assets and what it pays out on deposits and other borrowings - jumped to $50.1 billion in 2017 or a 15% increase from 2015 levels.

For "retail, checking and core savings, there's been little to no movement" on deposit rates, Marianne Lake, JPMorgan's chief financial officer, confirmed to bank-stock analysts this month on a conference call.

She signaled that regular depositors might again see little improvement in 2018 on their savings rate, at least relative to the Fed's expected rate increases of 0.5 percentage point to 1 percentage point.

"My expectation, just given where we are, in the absolute level of rates, is that on the retail space, we would still see a lot of discipline," Lake told the analysts. -TheStreet

Smaller banks are the place to be

According to BankRate's McBrde, higher deposit rates can be found at smaller banks and online financial institutions, which have been forced to pay higher rates to attract deposits. "They don't have a branch on every corner, ATMs everywhere and their name on the stadium," said McBride, adding "You're not going to be able to out-market the big banks, so you pay a higher rate on deposits and compete that way."

According to Bankrate, the top four savings rates can be found at CIT Bank, Goldman Sachs' Marcus Bank (which wrote the analysis referenced in this article), American Express, and Synchrony Bank - the largest provider of private label credit cards in the US to brands such as Amazon, Walmart, Lowe's, and whose NPLs have been rising at a dangerously fast rate recently. 

Meanwhile, Wells Fargo and Bank of America clock in near the bottom of the list. 

Bank of America CEO Brian Moynihan justifies his bank's crappy deposit rates by pointing to all of the wonderful services and conveniences offered by their savings accounts, which apparently can't be found elsewhere. Moynihan also points to an increase in average checking account balances - suggesting that savers are more interested in safety than return on capital. 

Citigroup CFO John Gerspach said that the low deposit rates are a "reflection of the state of competition" between banks. "Given deposit rates have been largely unchanged following the December 2017 hike, strong industry deposit growth suggests larger banks continue to have little problem raising cheap funds," wrote the Goldman analysts. 

In previous periods, top-yielding savings accounts kept pace with the Fed's increases, and would anticipate rate hikes by competitively raising their own payouts in advance according to McBride. Now, the top payers have a correlation with the fed of around 0.5, and the rates are dismal. 

Of course, when the much talked about volatility rears its head in 2018 and funds flow out of risk assets and into the "safety" of cash, any hopes savers had of higher rates on their cash will be sadly disappointed, especially if said rotation is followed by QE X and NIRP, in which case Americans may soon pay their bank for the privilege of letting them park their savings.

Comments

TrajanOptimus Thu, 02/01/2018 - 19:07 Permalink

Hang them all!

It sucks that you can not have a savings account that pays the same rate of inflation. THAT is why no one saves money in a savings account anymore. They are too busy trying to chase yield elsewhere so they don't watch their HARD EARNED MONEY lose purchasing power over time.

Bankers are FUCKING CRIMINALS!

tmosley NidStyles Thu, 02/01/2018 - 19:24 Permalink

What are they doing with their fees? A large part of what the banks did to remain profitable during the depression has been to raise and strongly enforce fees. If they are cutting those back, then they are, in fact, passing on some of the rate hike. If not, then they are not.

Not that I give a fuck. Fuck big banks.

In reply to by NidStyles

Archibald Buttle D503 Fri, 02/02/2018 - 02:18 Permalink

i like the way you think. and i cannot imagine, at this stage of the game, why anyone would bank with TBTF. i got out of that racket a long time ago. sadly, most of the people i know who should know better (i tell them all the time how they are getting ripped off and point to better examples) still park their FRNs at these criminal operations. so it goes...

In reply to by D503

gdpetti NidStyles Thu, 02/01/2018 - 23:39 Permalink

https://www.youtube.com/watch?time_continue=5&v=19tQXVdS5wY

Synagogue of Satan .... putting the pieces together of recent times and recent exploitation attempts by the usual 'Chosen People'... but it is their way, their role here in Purgatory... as they seek to 'graduate' to the 'dark side'. It all makes sense when you understand that. The rest of this is the same gameplan as usual.

In reply to by NidStyles

J S Bach Lost in translation Thu, 02/01/2018 - 19:22 Permalink

This period of history will someday be known as the era of the great counterfeiters.  Those evil souls who use usury to profit obscenely will find their karma in some way... rest assured.  Those who humbly try to save against their devious system will suffer today, but their thrift will be rewarded - somehow, someway.  I know this sounds quaint, but I truly believe it.

In reply to by Lost in translation

helloimjohnnycat J S Bach Thu, 02/01/2018 - 19:58 Permalink

...and, the kike money-changers have NOT suffered for how many centuries ?

Americunts enjoy being screwed by joos. 

The vast cattle-majority feel it's their duty to allow the self-proclaimed chosen ones to steal, connive, cheat, & subjugate all others as the big boss hook-nosers prosper.

As many here know, brainwashing works to such nth-degrees that country after country  has made it illegal to rail against the poor little sufferink joos.

 

In reply to by J S Bach

Endgame Napoleon helloimjohnnycat Thu, 02/01/2018 - 21:54 Permalink

In my former shop that was unrelated to finance, I had  multiple bank [owner] customers, none of whom were Jewish. They were all churchgoing Christians. Apparently, Christians can buy and start banks. Banking interest rates aside, these were nice people to deal with, nicer than most in a business that has almost 100% nice customers. All businesses are going to take advantage of the climate that exists, because if they don’t, their competitors will, driving them out. What we need are stricter lobbying rules that apply to everyone, Swampers included.

In reply to by helloimjohnnycat

MK ULTRA Alpha johngaltfla Thu, 02/01/2018 - 19:38 Permalink

It's not good to keep money in banks. One should use a S&L because the S&L must keep the money in the city(by law). Too big to fail banks are money center banks with branches all over the country sucking in money for casino banking. The casino operations are more lucrative than loaning money. This is why the velocity of money is the lowest in US history.

The money center banks are allowed to operate in security markets. The banks created a security market based on risk, the derivative markets. A derivative is not a bond and not a security. There are many kinds of derivative, but it is based on risk. A bet on risk, it can lose or it can pay. But to lose means the investor loses the amount placed on the bet. Just like a gambling casino. 

Banks sell derivatives as a viable investment instrument, the entire world is blanketed with derivatives on every kind of financial transaction. But a derivative is not a security like a stock, but the market is similar to a capital or equity market. It is a bet on the risk of a financial transaction. It may be the future price of corn, or the future repayment of a mortgage, there is risk protection sold on every kind of transaction. Money center banks make huge bets on risk, if they lose, then it can cause a banking failure.

Banks no longer need to pay depositors interest. The banks have better opportunities to make money and many banks want to charge for customer deposits. All kinds of charges are accumulated, even inaction fees, or this and that fees.

It's better to have money in more than one bank in case of a bank holiday. But a money center bank is exposed to more risk than a local S&L. And a Certificate of Deposit will pay better interest than a saving account interest rate.

That's your banking talk today.

In reply to by johngaltfla

44magnum TrajanOptimus Thu, 02/01/2018 - 19:19 Permalink

No shit

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

-The Rothschild brothers of London writing to associates in New York, 1863.

In reply to by TrajanOptimus

Twee Surgeon 44magnum Thu, 02/01/2018 - 20:24 Permalink

There are no profits to be made anymore. My wife's Bank account was frozen by California because some Wetback was working on her SSI card and they wanted the back taxes. No recourse at all, no evidence and we do not even drive through California. Talk to a robot on a phone for 3 weeks to get a call back from a human. Utterly insecure Banking is a pain in the ass and nothing more and that's just while Wells Fargo isn't fuc......up the Bum, Never mind. Banks must burn and the cohorts within. A nationalized Banking option might be a good idea but I doubt it, if the FBI itself is crookeder than a Congressman their's little hope for honest Banking. An Imperative tool for growth in any nation as far as I can tell, in this day and age.

 

In reply to by 44magnum

Consuelo Thu, 02/01/2018 - 19:09 Permalink

"Big Banks Punish Savers With Pathetic Interest Rates Despite Fed Hikes"

That's right.  Because they can, and...  They don't have to...

 

However, the prudence of saving first and spending later is just slightly older and more proven than the financialization/debt & consumption model of the past ~30-odd years.   

Fear not prudent savers, your time is at hand.   And that ain't no joke.

socalbeach Thu, 02/01/2018 - 19:10 Permalink

Open up an account at Treasury Direct and buy 4 week T bills, they're paying about 1.4% now.  Chicken feed, but better than the 0.1% I was getting at my bank's "High rate money market" account.

helloimjohnnycat socalbeach Thu, 02/01/2018 - 20:32 Permalink

That's correct but you're continuing to play their game.

 

The following is Pure Truth :

In late Nov., I withdrew a large sum.

As the teller was processing the draw, not one, but two bank cunt " executives " approached me and began mumbling.

I thought they were going to ask me what I was " up to " and I was ready to tell 'em to fuck-off post haste.

But no, those slags were pretending they had a new plan for my account.

Quote : " Reb, we want to show you how your money is going to earn more interest. "

Get this : I told them " No Thanks ! " 

They about fell over. One is a looker and yeah, I'd return the favor.  lol

I then scowled :  You crooks don't need to ask me to pay-out higher rates. Should have been increased when the Fed raised !

The pretty one replied : Our offer has a limited time and there's no guarantee it will continue.

I reminded her nothing is guaranteed except the usual ( D & T ), I don't care, and I'm in a hurry so hand me my check.

They've been ignoring me now which is good.

 

I surmised the plan was to lock me in at One-Point-Something Low and immediately decided to wait. Or not. We've been screwed so hard & for so long that I want nothing to do with any bank but I'm stuck until I find additional investments to buy. 

It's a good bet rates will rise or the banksters would not have been offering to " help ".

 

 

In reply to by socalbeach

cowdiddly ug Thu, 02/01/2018 - 19:27 Permalink

Amen brother. I joined NASA's CU by invitation years ago and jumped on it. I would NEVER go back to bank. And no, I have never been a freaking astronaut or even worked for .gov. Fuck a crooked assed bank.

They have 48m CDs at 2.4% right now. Not great, but better than any bank. 7.9-10% CC rates, lower loan rates, lots of teaser offers, plus they appreciate your business.

In reply to by ug

two hoots Thu, 02/01/2018 - 19:15 Permalink

Just as Wray is taking care a corrupt FBI, the CB is taking care of it's manipulating member banks.  That's how stuff works.  Not counting the 6% interest the Act gives member banks on top of all the other benefits.   Seems the Act could be changed to fix prime rates with required savings rates.  Congress could do that in a day, edit/vote.  

Just what does that free checking cost you?

 

 

 

buffalosky Thu, 02/01/2018 - 19:18 Permalink

Each US dollar represents DEBT owed to the FED, not wealth. America is STILL BANKRUPT and so f-cked. Couldn't have happened to a better group of jackasses who fell asleep at the wheel, expecting others were going to take care of them. Ha! So funny, it's sad.