TheStreet and RateWatch Report Top CD Rate Issuers
NEW YORK, Jan. 8, 2013 /PRNewswire/ -- RateWatch, a premier banking data and analytics service owned by TheStreet, Inc. (NASDAQ: TST) reported today that the average national rate on a 4-year and 5-year CD fell 0.01 percent based on data collected from over 90,000 financial institution locations. RateWatch also reported today the top rate issuers across the nation along with financial strength ratings.
The main reason for bank deposit rates being so low for so long is the Federal Reserve's accommodative policy of keeping its target range for the short-term federal funds rate in a range of zero to 0.25% since late 2008; however, The Federal Deposit Insurance Corporation's Transaction Account Guarantee Program ended on Dec. 31, and that could put some pressure on smaller banks' liquidity.
The Transaction Account Guarantee Program went into effect in November 2008, to essentially remove any limit on FDIC deposit insurance coverage for most noninterest-bearing transaction accounts. This provided a tremendous boost in cheap liquidity, even for banks in weak financial condition, because small businesses no longer had to worry about the safety of their checking account deposits, which could easily exceed the normal deposit insurance limits. Now that the program has ended, businesses who were sticking with the banks because of the certainty of the deposit insurance protection may consider other cash management options, including non-bank money market funds.
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