Here is Bank of New York / Mellon’s latest financial report: (as of June 30)
It’s pretty stunning and shows just how sick things are in the banking business. If you missed it, BoNY Mellon was the first lender to say it is going to start charging large corporate customers for “parking cash” with them.
A big deal was made last week by the EchoMedia(tm) repeating the factoid that “Apple has more cash than the Federal Government”. Mellon had a total of $197 billion on deposit by its customers (that’s money it has to give back to its customers eventually). What is it doing with that money?
– $56 billion is sitting in the Federal Reserve account
– $60 billion is loaned out to other banks
– $5 billion is loaned on very short term Fed Funds
So well over half of the money they’ve taken in, they can’t do anything with – they’re just parking it at the Fed earning nothing – or loaning to other banks. They aren’t exactly loaning out money to GM to build new car factories… They made about $1.5 billion in the 2nd quarter.
Let’s compare that to Bank of America – they lost over $7 billion in the 2nd quarter (BoA lost 20% of its value today)
Bank of America has about $1 trillion in assets on deposit. It has $119 billion in cash parked doing nothing. It has another $235 billion in the short term fed funds market but also has borrowed $239 billion, so it is a net short term borrower. It has $200 billion sitting in its “Trading Account”.. (See: Glass Stegall) BoA is sitting on a $trillion of other liabilities beyond the deposits of its customers, including $429 billion in long term debt.
Banks are supposed to accumulate money by attracting customers with money, not borrowing it in the bond market. This is one sick bank. And the FDIC doesn’t have the cash to save it. No other rational bank would want to acquire it. The clock’s ticking
My brother in-law is a Bank branch manager for a small bank that has 12 or 13 branches in Virginia. They have to send money back to the FED in Richmond if they get over a certain amount so they don’t have to pay interest on the money(Cash).
No wonder none of these banks pay anything in interest anymore, they can get it from the FED cheaper than they can paying a little interest and getting customer deposits. If they need cash they order it from the FED and Loomis-Fargo brings it right out.
Another reason to blame Geithner fro this mess.
Hate.
While they work closely together, Bernanke is the guy who runs the Fed. He’s been the one keeping interest rates near zero.
I wonder how much the lack of inteest on savings is increasing the deficit on the tax side – and how much it is causing retirees to not spend money.
Bernanke stll hasn’t realized nobody is borrowing money at 0%. Printing more dollars is the cause of the economic slowdown, not the cure.
Yeah, I know Ben runs the Fed. I just like blaming Geithner for everything, LOL
Have a good one, Art
Today’s news is Bernanke is going to keep interest rates near zero through 2013. This is going to be one nasty rebound when the tightened spring is released.