SAN ANSELMO, Calif.-A new analysis from Market Rates Insight suggests the tax on the wholesale funding of "big banks" proposed by the Obama administration will increase the cost of funds for all other financial institutions.
The tax will force "big banks" to raise needed capital through the retail deposit market. However, in order to raise large amounts of capital in a short time, the "big banks" will have to be more aggressive in their deposit pricing, which means higher interest rates.
The latest analysis by Market Rates Insight shows there is a 70% probability that all other banks will follow the lead of the "big banks" and raise their deposit interest rates within one week in order to protect their market share and deposits from shifting to the "big banks."
For info: www.marketratesinsight.com
