Remember Mr Drysdale – the banker from the TV show The Beverly Hillbillies? Jedd Clampett really liked Mr Drysdale’s bank because they didn’t charge him anything to hold onto the money.
Well, fiction has now crossed over into real life. Bank of New York/Mellon doesn’t want your money unless they can charge you for keeping it safe.
If you were looking for the bank in the United States most likely to survive a banking crash, BoNY/Mellon is probably it. BoNY was founded by Alexander Hamilton. The Mellon part refers to Mellon Bank in Pittsburgh, where all the rich industrialists (Carnegie, Frick, Mellon, Charles M Schwab) made their fortunes from the steel business. Mellon and BoNY are “Old money” banks. When you look at the FDIC’s risk profiles, this bank is very non-risky. BoNY/Mellon has $23 trillion in assets it manages.
So business deposits are not protected by FDIC insurance – a business has a lot at stake if a bank fails where they have their money, so they don’t just put money in banks randomly.
BoNY/Mellon has been flooded with cash that it can’t find a productive use for without risks. Short term treasury bills are paying nothing.
So today, BoNY/Mellon told its big business customers to go away. If you have more than $50 million in cash, the bank is now going to charge you 0.13% for keeping their money “safe”.
Welcome to the Obama World of economics. And you thought you had a right to deposit money in a bank? This might at least party explain the bond market – Japan and the ECB also were in the market buying up bonds today to stabilize their currencies.