deposits

  • 11 Jan 2013 at 1:32 PM
  • Banks

Wells Fargo Mostly Putting Deposits Into Gold Ingots These Days

Bank earnings season kicked off today with Wells Fargo’s announcement, and since I have nothing really to say about Wells Fargo earnings I figured the least I could do was put up some charts instead. Not on earnings – they’re up! net interest margin is down! on balance, gnash your teeth a little! – but on what Wells Fargo is doing with all the money it’s got.

This seems like a popular question to ponder, since it’s got rather a lot of money. So today brings the Journal‘s vividly headlined “Wads of Cash Squeeze Bank Margins”, and earlier we had Frank Partnoy and Jesse Eisinger’s attempt to find out where Wells is hiding all its fraud. The main thing is:

  • Banks have lots of deposits because everybody’s scared of everything so they put their money in the bank.1
  • Banks aren’t making lots of loans for some reason, with the reason ranging from “banks are a bunch of scumbags” to “you’re all a bunch of deadbeats.”
  • So they have money left over.
  • So they put it somewhere.

A natural question is “where is the somewhere?” and here is where Wells puts it:

That’s just various bits as a percentage of total deposits. You can see loans have decreased as a percentage of deposits since the crisis; other risky-type assets – trading assets and available-for-sale corporate and mortgage bonds, etc. – have increased a bit but not enough to make up for that drop: Read more »

  • 18 Dec 2012 at 5:45 PM
  • Banks

Banks Suffer From Too Much, Too Little Liquidity

A thing that a bank does is take in short-term money in the form of deposits and lend out long-term money in the form of loans. Two things that you could want out of your banks are:

  • for them to lend out lots of their deposits in long-term loans, and
  • for them to keep lots of money in the bank to give back to depositors who want their money back at any particular time.

A thing two consider is that those two desires are (1) each perfectly sensible and (2) opposite. Another thing to consider is that everything that happens, someone can complain about.

So today we learn: Read more »