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Friday, November 14, 2008

Fake "Bank CD rate war"

Today's WSJ notes
Banks Wage Rate War for Deposits
Consumers Benefit as Institutions Move to Shore Up Funds, but Profit Margins Suffer

So what's the evidence for this "war"?
Citigroup has been deploying a double-barreled pitch of safety and hefty rates of up to 4% on six-month CDs.

Wow! 4%! Almost up to the rate of inflation! (The consumer price index is up 5.4% for the 12 months ending September 2008.)
Trying to keep pace, Virginia Commerce is now offering CDs with interest rates as high as 4.5%. That is eroding the bank's profit margins.

Imagine that. Eroding the bank's profit margins. The horror! Time for the feds to throw more money that that bank.