Some news articles are suggesting that the top 4 mega banks will be the benefactors of the latest banking woes due to nervous customers moving their money to the “too big to fail” banks.
I’m wondering if Wells Fargo could reach a point where they can’t take in new deposits due to the Federal Asset Cap??
We’d decrease interest bearing liabilities with deposits, unless we’ve retired all bonds
All you accounting geniuses saying "deposits are liabilities" realize they're giving us cash, right? It's an asset too. Double entry accounting. An asset and a liability get booked. We turn that cash into loans or invest it in securities. No wonder our country is an economic catastrophe - the bankers don't even understand t-accounts.
Yes oh great account guru but the bottom line is that the DEPOSIT always remains on the liability side of the ledger. If WF leaves those funds in cash and doesnt lend them out then we are in worse trouble than we think.
Good lord people. Double-entry bookkeeping doesn't matter. Deposits are still classified as a liability for the bank. They are an asset for the account holder who made the deposit.
The bank does not own the money.
With fractional reserve banking, a bank can create an asset, a new loan, using the deposited money. It is booked as a liability for the borrower. And then a bank's assets grows.
I thought we could grow organically but not grow due to mergers/acquisitions.
Assets = Liabilities + Equity
If you take on Liabilities (deposits), Assets increase. It absolutely is limited by the asset cap.
Exactly. It costs money to service deposits. If the bank takes deposit dollars and doesn’t turn that into revenue generating assets they lose money on the deposits.
either way it nets to zero and doesn't affect asset cap
All you accounting geniuses saying "deposits are liabilities" realize they're giving us cash, right? It's an asset too. Double entry accounting. An asset and a liability get booked. We turn that cash into loans or invest it in securities. No wonder our country is an economic catastrophe - the bankers don't even understand t-accounts.
Deposits are liabilities on the books of a bank. Loans are assets. Seems backwards to a novice or someone who just didn't think it through.
I think you'll find many large banks don't pay much interest on their savings. has nothing to do with asset caps, more likely to do with greed.
People always say that Wells Fargo pays a $hitty interest rate on savings accounts because they don’t need/want customer deposits due to the cap limits on our growth.
So which is it??
wouldn't it be quicker for you to Google the answer than post here and check back later for snarky responses questioning your intelligence given you should know how a bank works?
deposits are liabilities for the bank and therefore not subject to asset cap.
More regulation coming which favors big banks that can afford the lawyers, small banks go by the wayside, big banks cater to govt and their desire to move to a digital currency which can be controlled. Want to buy a tank of gas? Nope. Digital currency won’t allow it. The world as we know it will no longer exist and it’s the demise of our civilization. The Hunger Games becomes a reality
Customer assets are theirs, not the banks. Loans are the biggest portion of what impacts the asset cap.