Peter1469
07-31-2014, 06:45 AM
Fed is ending QE (http://www.ft.com/intl/cms/s/0/58848270-1729-11e4-8617-00144feabdc0.html#axzz390RimQRv)
As the Federal Reserve ends quantitative easing as much as $1T could leave the large banks. Investors are clearly worried about this (which is more evidence that the markets have been propped up by GE).
Also interest rates are to normalize. I don't they really mean return to historic averages (4-5%) as they will greatly harm the economy and would use most discretionary spending just to service the debt. Big government types wouldn't know what to do if that happened.
US banks are steeling themselves for the possibility of losing as much as $1tn in deposits as the Federal Reserve reverses its emergency economic policies and raises interest rates.
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“There are investors, traders and sellside analysts that are very concerned about it,” said one top-10 investor in several large US banks.
An outflow of deposits would be a reversal of a five-year trend that has seen significant amounts of extra cash poured into banks thanks to the Fed flooding the financial system with liquidity. These deposits, which act as a cheaper source of funding, have helped banks weather the aftermath of the financial crisis.
Maybe savers will get a break and start to make decent interest on their deposits.
As the Federal Reserve ends quantitative easing as much as $1T could leave the large banks. Investors are clearly worried about this (which is more evidence that the markets have been propped up by GE).
Also interest rates are to normalize. I don't they really mean return to historic averages (4-5%) as they will greatly harm the economy and would use most discretionary spending just to service the debt. Big government types wouldn't know what to do if that happened.
US banks are steeling themselves for the possibility of losing as much as $1tn in deposits as the Federal Reserve reverses its emergency economic policies and raises interest rates.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs (http://www.ft.com/servicestools/help/terms) and Copyright Policy (http://www.ft.com/servicestools/help/copyright) for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/58848270-1729-11e4-8617-00144feabdc0.html#ixzz392tQ2nLK
“There are investors, traders and sellside analysts that are very concerned about it,” said one top-10 investor in several large US banks.
An outflow of deposits would be a reversal of a five-year trend that has seen significant amounts of extra cash poured into banks thanks to the Fed flooding the financial system with liquidity. These deposits, which act as a cheaper source of funding, have helped banks weather the aftermath of the financial crisis.
Maybe savers will get a break and start to make decent interest on their deposits.