Banks are so overloaded with cash they are losing money on deposits.
by Mike ‘Mish’ Shedlock
Mish Talk
No More Cash Please
Some banks, awash in deposits, are encouraging corporate clients to spend the cash on their businesses or move it elsewhere. It’s a strange case of “No More Cash Please“.
U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it. Some banks are encouraging corporate customers to consider alternatives.
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.