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Banks to Companies: No More Deposits, Please:
U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it.
When the coronavirus pandemic hit last year, corporate executives rushed to raise money. Banks have been holding that cash ever since, and because companies are reluctant to borrow from them, they can’t turn it into income-generating loans. That has weighed on banks’ profit margins, and some have started pushing corporate customers to spend the cash on their businesses or move it elsewhere.
Bankers say they thought the improving economy would reduce companies’ desire for holding cash, but deposit inflows have continued in recent weeks. Chief financial officers and treasurers, many still wary of the pandemic’s impact, say they aren’t ready for big changes, even if they earn little or nothing on their deposits.
[...] Top of mind for many big banks is a rule requiring them to hold capital equivalent to at least 3% of all assets. Worried about the rule’s impact during the pandemic, the Fed changed the calculation in 2020 to ignore deposits the banks held at the central bank, but ended that break this March. Since then, some banks have warned the growing deposits could force them to raise more capital, or say no to deposits.
(Score: 0) by Anonymous Coward on Wednesday June 16 2021, @01:29AM (7 children)
What inflation? Show me any appreciable inflation in prices. The money supply increasing doesn't matter when money is not being spent.
(Score: 2) by ChrisMaple on Wednesday June 16 2021, @03:47AM (6 children)
Lumber prices have almost doubled. Some foods have sharply increased in price.
(Score: 0) by Anonymous Coward on Wednesday June 16 2021, @06:46AM (5 children)
https://www.forbes.com/sites/billconerly/2021/05/22/why-lumber-and-plywood-prices-are-so-high-and-when-they-will-come-down/ [forbes.com] The problem with a lot of prices is not inflation, it is the supply and demand having been drastically changed during the pandemic.
Besides, most of that "inflation" worry is just the comparisons being all off because of the pandemic as well. When you compare now to where we were then, yes it looks bad. But compare the actual trend line [stlouisfed.org] and it isn't nearly as bad as everyone seems to think
(Score: 0) by Anonymous Coward on Wednesday June 16 2021, @03:23PM (4 children)
The D in math was because we had a substitute teacher for a week, and in english the D was just because of one essay the teacher didn't like. The B in gym should have been an A but I hurt my ankle and couldn't finish the lap.
So basically I got straight A's.
Imagine being a parent that would accept this type of rationalizing.
(Score: 2) by sjames on Wednesday June 16 2021, @05:19PM (1 child)
If the kid had been in hospital for most of the year, that might be accepted as an explanation of less than stellar grades.
(Score: 1) by khallow on Friday June 18 2021, @07:47AM
That kid still wouldn't have gotten straight As as a result.
(Score: 0) by Anonymous Coward on Wednesday June 16 2021, @09:23PM (1 child)
It is more like your kid has been getting B+ grades most of your life, had a dip down to C/C- grades for a year and then improved to B+ again. The conservative parents are the ones saying "wow look at how much higher their grade is this year." The other parent is just pointing out that the kid just went back to where they've usually been.
(Score: 0) by Anonymous Coward on Thursday June 17 2021, @04:38AM
I got a D because Trump.
That's ok son.