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This is what you claimed banks did with deposits

"It holds it as custodian and pays interest on it."

So the motivation for this price war is somewhat elusive. The prestige of being a custodian and paying interest?

I'm more used to looking businesses that try make profits or at least revenue. This concept of borrowing money from depositors as a beneficent service has me befuddled.

by rootless2 on Wed Feb 29th, 2012 at 12:26:03 PM EST
[ Parent ]
Having a customer's deposits means the bank becomes involved in all the payments activity of that customer and collects all kinds of service provider fees from it.

Also it brings the customer in the door so they can be sold loans.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Wed Feb 29th, 2012 at 12:28:19 PM EST
[ Parent ]

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