Financial News: Geithner Confirmed, FDIC Seeks Interest Rate Resrictions
There are a couple of interesting points of financial news today:
- Timothy Geithner has been confirmed as Treasury Secretary by the Senate.
- The FDIC is going to tighten its interest rate requirements.
These developments could have an impact on your personal finances, as well as on the economy.
Timothy Geithner as Treasury Secretary
During his confirmation hearings, and on other occasions, Geithner has expressed a desire to hurry along plans for economic stimulus. He has also insisted that aggressive measures be taken to shore up the banking system and stabilize banks.
Geithner agrees with the tax cuts proposed by President Barack Obama, and that means you could be seeing more money in your paycheck. However, other than this — and some attempts to help those in foreclosure trouble — most of the economic stimulus is likely to continue the focus on big banks. And it remains to be seen whether this “trickle down” approach will actually work. It hasn’t so far.
FDIC caps interest rates on deposits
Some banks, in the hopes of luring depositors, have offered accounts at high yields (comparitively speaking). This has the FDIC concerned since poorly capitalized banks with a bunch of depositors mean bigger payouts if they fail. The FDIC had this to say in a press release:
Prompt Corrective Action requires the FDIC to prevent banks that are less than Well Capitalized from soliciting deposits at interest rates that significantly exceed prevailing rates. The FDIC’s current regulation ties permissible interest rates paid by these banks on deposits solicited nationally to the comparable maturity Treasury yield, and ties permissible interest rates on deposits solicited locally to undefined prevailing local interest rates.
This new rule is likely to further tighten things up in terms of what banks are willing to do for customers seeking loans. Banks will want to hold on to as much capital as possible as they fight to remain solvent.
