Few could have envisioned it even just a few years ago, but it's happening now, and on an ever-widening scale. More big U.S. banks are shunning cash, because the banking system has become so dependent on other "assets" that large cash deposits actually pose a threat to their financial health, according to The Wall Street Journal.
State Street Corporation, a Boston-based institution that manages assets for institutional investors, has, for the first time, begun charging some customers for making large cash deposits, according to people familiar with the development. And the largest U.S. bank in terms of assets — JP Morgan Chase & Co. — has dramatically cut "unwanted" deposits to the tune of $150 billion this year alone, in part by charging customers fees.
What gives? What kind of world do we live in when banks no longer want cash?
As the WSJ reported: "The developments underscore a deepening conflict over cash. Many businesses have large sums on hand and opportunities to profitably invest it appear scarce. But banks don't want certain kinds of cash either, judging it costly to keep, and some are imposing fees after jawboning customers to move it."
WSJ further explained the phenomenon and fallout: "Jerome Schneider, head of Pacific Investment Management Co.'s short-term and funding desk, which advises corporate and institutional clients, said that as a result of the bank actions, he and his customers have discussed as cash alternatives boosting investments in U.S. Treasury bonds, ultrashort-duration bond funds and money-market funds. Clients have been put on warning," Schneider said, when it comes to cash.
In the meantime, there appears to be no end to the federal government's meddling in both the financial industry and just about every other facet of American life. Causing more problems than it solves — that's a classic congressional move.
