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.