It's an object lesson...
in how depositors have misunderstood their position in the banking world. I suspect that if you asked 100 people if their deposits were assets or liabilities for their bank 95 of them would say 'assets'. But, of course, this is wrong-deposits are a liability on the bank's balance sheet. So, if the bank is going to be able to turn those liabilities into something productive they need, in the first instance, to keep their costs of administering those funds down and pay out as little, if any, interest on them;then lend those funds out at rates that will produce a profit. Now the banks find themselves in a place where even administering the normal sorts of things like checking and debit card accounts costs too much against the potential for income off loans. Out goes interest rates on savings and checking accounts and in comes fees for walking through the door. An article a few days ago said that some banks are going to charge to deal face-to-face with a teller instead of a machine! With the new rules capping the income at the merchant end of debit card transactions the banks are going to the only other party left-their own customers.
I'm not sure what the big lesson is to be learned from this. Certainly if no bank had ever been TBTF then the taxpayer would not have been on the hook for the bailout; but seeing as they were TBTF and we did,in fact, bail them out, it seems reasonable that the banks give some quid pro quo beyond just not killing the global economy (which they seem to think is their sole legitimately required contribution). All that happened has so polluted the basic reward and punishment mechanism in the marketplace that it is hard to know what constitutes a breach of ethics anymore.:help::help:
