23 September 2017
Anthony Carfang

Treasury Strategies

Anthony Carfang - Treasury Strategies

4Posts 18,145Views 0Comments
Finextra community

Treasury Management

This network brings together treasury and financial professionals who manage treasury functions. Members share a common interest in treasury, cash management, banking, risk management and investments.

Regs to impact companies and banks doing business in U.S.

03 July 2010  |  3822 views  |  0

A provision was approved by the U.S. House and Senate financial reform conferees last week, which allows banks to pay interest on business demand deposit accounts for the first time since the Great Depression.

Below is our short synopsis of the issues.

Commercial Banks will face higher cost of funds as they begin paying interest. However, they will be better able to compete for deposits through interest payments and FDIC guarantees under TAG. Higher cost of funds and deposit insurance premiums will probably be recouped through higher fees on transaction services.

The challenge for banks is to carefully calibrate rate structures and transaction fees such that they attract a customer mix that optimizes their return on capital.

Fund Companies will face increased rate competition from the banking sector. Their challenge will be to convince customers that the resulting higher banking service charges will offset interest paid. They will need to position their funds as either yield-enhanced or safer than bank deposits – a task made tougher by recent changes to rule 2a-7 and FDIC insurance.

However, fund companies can point out to regulators that if customers exit funds and move into the banking system, “too big to fail” banks will become even larger.

Corporate Treasurers will need to sort through several changes that will result from the RegQ repeal. In the short run, they will experience a volatile market, characterized by new products, new rate structures and new fees, as well as promotional pricing. Credit worthiness of the institution becomes a larger issue. It’s likely that companies will need to evaluate new and tiered rate structures, earnings credits, transaction fees, deposit insurance pass-thoroughs, short-term investments, and sweep accounts.

These changes will impact companies differently depending on their balance levels, transaction volume, liquidity needs and financial situation.

The outcome of these changes will impact everyone in the financial services industry. We'd be interested in hearing your thoughts on the topic.


TagsPaymentsWholesale banking

Comments: (0)

Comment on this story (membership required)

Latest posts from Anthony

U.S. Presidential Report Extends Uncertainty for Money Funds

22 October 2010  |  3564 views  |  0 comments | recomends Recommends 0 TagsPaymentsSibosGroupFinancial Services Regulation

Dangers of unlimited deposit insurance.

18 October 2010  |  4049 views  |  0 comments | recomends Recommends 0 TagsSibosWholesale bankingGroupTreasury Management

Why Are Companies Hoarding Cash?

08 July 2010  |  6711 views  |  0 comments | recomends Recommends 0 TagsPaymentsWholesale bankingGroupTreasury Management

Regs to impact companies and banks doing business in U.S.

03 July 2010  |  3822 views  |  0 comments | recomends Recommends 0 TagsPaymentsWholesale bankingGroupTreasury Management

Anthony's profile

job title Partner
location Chicago
member since 2007
Summary profile See full profile »
Treasury Strategies, Inc. is the best consulting firm in the world - both strategically and tactically - for treasury, payments, and liquidity related problems and opportunities. Get it right the fir...

Anthony's expertise

Member since 2007
4 posts0 comments
What Anthony reads
Anthony writes about
PaymentsSibosWholesale banking
Anthony's blog archive
2010 (4)

Who's commenting on Anthony's posts