A New Company Helps People Flee San Francisco’s Ridiculous Cost of Living

Between high housing costs, endless traffic, and rising anti-straw fanaticism, more and more Bay Area residents are looking for greener, cheaper pastures.

In June, the Bay Area Council—a business-sponsored non-profit—put out a poll finding that some 46 percent of surveyed residents said they would likely be leaving the San Francisco area within the next few years.

Now, thanks to the magic of the marketplace, there is a company dedicated to helping them do just that.

Leaving The Bay Area was founded this year by Scott Fuller, a long-time real estate broker in the San Francisco area who says an increasing number of his clients are looking to pack up and move. His company helps these emigrants sell their home, find a new house in a more fitting location, and manage all the logistics so that they can move from door to door, without having to spend any time in placeholder hotels or rental housing.

Fuller says his clients fall into two categories: retirees looking to stretch their savings, and younger professionals who, thanks to the Bay Area’s cost of living, have trouble making ends meet.

“In a lot of cases they might have a good job here, they might be making a good income, but the money just doesn’t go very far with the cost of living and how much they’re having to pay on their mortgage each month,” Fuller tells Reason.

This matches pretty closely with the Bay Area Council’s survey, which found 45 percent of those who said they were likely to leave were concerned about the general cost of living. Some 25 percent of respondents specifically cited the cost of housing. Another 9 percent said traffic congestion was pushing them out.

The median home price in the San Francisco metro area is $858,800, making it the second most expensive place to live in the United States, behind only Manhattan, according to the financial forecasting publication Kiplinger. Analytics firm INRIX ranks San Francisco as the third most congested city in the country.

In the few months it’s been active, Leave The Bay Area has helped some 20 people leave the region, Fuller says. That number pales in comparison to the roughly 10,000 people the city added last year, but the fact that Fuller’s specialized service exists at all suggests something is off with the way San Francisco is managing its spectacular post-recession growth.

The city has added over 100,000 jobs since 2010, many in a thriving tech sector. Coping with that growth—so that new residents can find a place to stay, and old residents don’t feel too squeezed—requires building new housing for migrants. This is something the Bay Area has largely failed to do, thanks in part to incredibly restrictive land use regulations and a byzantine approval process for new construction.

In the same period that San Francisco has added those 100,000 jobs, it’s also added only 20,000 new units of housing. The situation is even worse in some suburban communities, where—at current rates of home construction—it will take centuries for these cities to meet their housing production goals.

The upshot of keeping a lid on supply is that demand for living in the area will start to fall off as more people decide that the benefits of living in such a high-cost area not worth what they have to shell out for rent or a mortgage.

This is particularly true as cities offering a similar set of amenities, professional opportunities, and cultural attitudes start to see home prices and rents decline. Fuller says that many of his clients are making the move to Seattle and Portland, two cities undergoing their version of a tech boom. These cities have also seen rental prices declining this past year thanks to a wave of new housing construction.

If San Francisco wants to remain a magnet for new people, new companies, and new ideas, it should emulate those cities, and allow the construction of new housing.

from Hit & Run https://ift.tt/2ySXPpv
via IFTTT

Georgia Mayor Has Plan To Round Up Town’s Sex Offenders on Halloween

A small-town Georgia mayor plans on confining the town’s sex offenders to city hall for Halloween night, despite evidence that there’s no spike in sex crimes against children on the holiday.

“In order to ensure the safety of our children, all sex offenders in the City of Grovetown area will be housed in the Council Chambers on Halloween night from 6 p.m. to 9 p.m.,” Grovetown mayor Gary Jones announced on Facebook Monday morning. “There are approximately 25-30 offenders and they will be overseen by 4 officers from Georgia Probation Department and one Grovetown officer.”

The policy will only apply to offenders who are on probation, not all registered sex offenders in the town (a move that would have almost surely been illegal).

In any case, the move is yet another hysterical response to a largely mythical fear: the incurable and irrepressible pedophile who targets random children on Halloween.

The thing is, data just doesn’t back up those fears. Study after study has found that same-crime recidivism rates for sex offenders hover between 3 and 4 percent, lower than other types of crime and nowhere near the 80 percent rate once falsely cited by Supreme Court Justice Anthony Kennedy, for instance.

As Reason‘s Lenore Skenazy recently wrote about Patch.com’s regrettable tradition of publishing the addresses of sex offenders on Halloween, there’s also no evidence that sex crimes against children rise on Halloween:

[A] thorough study of 67,000 cases of child molestation found zero increase in sex crimes against children on Halloween.

The vast majority of crimes against children are not committed by strangers, but by people close to the kids. Stranger danger is actually pointing worried parents in the wrong direction.

What’s more, sex offenders are not especially likely to go after kids on Halloween. Contrary to popular belief, “across the board the majority of sexual offenders do not go on to reoffend,” says Jill Levenson, a professor of social work who has studied Halloween crime.

“The research is very clear: There’s no increased risk to children on Halloween,” says Sandy Rozek, communications director for the National Association for Rational Sexual Offense Laws, a group that advocates for reforming lifetime sex offender registries. “Virtually all sexual offenses against children are committed by those in their lives, those they already know or are close to—often family members, peers, and authority figures.”

But the lack of data—or the data flat-out contradicting popular belief, to be more precise—hasn’t stopped public officials from thinking about the children.

For example, because of Miami-Dade County’s incredibly broad restrictions on where sex offenders may live, many have been forced to survive in constantly shifting homeless camps, hounded by police from location to ever-more-remote location.

As The Washington Post‘s Radley Balko wrote last year, there is something fundamentally at odds with our concept of justice in America to release sex offenders from prison, which for every other type of offender signals that they have paid their debt to society, and then continue to punish them in perpetuity:

There isn’t much sympathy out there for sex offenders. But if the public wants to prioritize retributive justice over all else and put every sex offender away for life after the first offense, then let’s have that debate. I wouldn’t favor that approach. But that at least is a much more honest discussion than how we’ve approached this issue for the past 30 years or so. What we’ve done instead is allowed sex offenders to be “released” from prison, but then made it impossible for them to live anything resembling normal lives. Casting them off and marginalizing them after they’re out, regardless of the nature of their crimes, isn’t just cruel; it doesn’t make society any safer, either.

Who cares about nerdy studies and abstract concepts of justice, though, when you can fear-monger on the spookiest of nights? It’s a surefire recipe for votes, but not much else.

from Hit & Run https://ift.tt/2PTKhl2
via IFTTT

On America’s “Most Extreme Ventures Into Social Unreality”

Authored by James Howard Kunstler via Kunstler.com,

Lost In Translation

Saturdays, when fewer eyeballs see the paper, The New York Times likes to publish its most extreme ventures into social unreality. Last week’s prank was the story at the top of page one that declared:#WontBeErased: Transgender People and Allies Mobilize Against Trump Administration Proposal. (The accompanying photo featured a rainbow flag, of course, denoting that there was a pot-of-gold awaiting true believers.) This was a response to a Trump administration policy memo calling for “strict definition of gender based on a person’s genitalia at birth,” The Times said.

The dishonesty at work here ought to impress those observing the slow-motion collapse of culture in the USA. The political Left has taken its lessons in the abuse of language straight from the campus “post-structuralist” workshops, where novelties of narcissism get churned out by striving grad students in the ceaseless pursuit of cutting edge prestige (and academic career advancement). The game is to produce a never-ending chain of self-referential, status-enhancing world-views as a replacement for consensual reality. The more “marginalized” one can claim to be, the more deserving of high status (including tenure, grants for attending echo-chamber conferences and symposia, and a claque of attending assistants to actually teach those pain-in-the-ass classes). The goal is to get to feel special, and especially deserving of special privileges based on special grievances.

The net effect is to destroy whatever remains of an American common culture, to divide and conquer the polity in the hope that society might advance into a state with no rules and no boundaries – except for whatever capricious actions the “Progressive” authorities might choose, based on how they feel at any particular time. It must be obvious that this all comes down to a vicious sort of sentimentality. It’s exactly what turned the governments of the Bolsheviks and the Nazis into killing machines. It’s Kafka’s nightmare of the murderous bureaucratic state that disposes with the rule-of-law.

I suspect that neither The New York Times nor the Democratic Party actually cares about so-called transgender people, who are merely being used as stalking horses to provoke conflict. The Left’s main beef these days is that Mr. Trump is in the White House, signifying that Daddy’s in the House,an intolerable condition. The Left is desperate to get rid of that particular Daddy and Daddyism per se and altogether. Daddyism represents rules and boundaries. The Left prefers chaos. It’s clearly a juvenile disposition, since that point-of-view fails to apprehend that the universe is chaotic enough without additional help from them. And they are still in despair over the failure of “mommy” (HRC) and her disappearance into the darkling woods of political ignominy.

The rule at hand is that the word gender is not a substitute for the word sex, and that in the world of real things, you don’t actually get to declare what sex you are. You can engage in all kinds of behaviors, such as enjoying intimate relations with members of your same sex. You can pretend to be a member of the opposite sex. In statistically very rare instances, you can come into this world with genital abnormalities that present developmental problems, but most of the people currently pretending to some kind of “intersex” status do not fall into that category. The game of pretend can be very personally intense, I’m sure. But it’s still just a game of pretend.

I propose the perhaps novel idea that there is a place for everything and that the correct place for the marginal is… on the margins! The argument lately, especially on the Progressive side, has been that the marginal ought to occupy the center (of American life). That is surely the argument of The New York Times. It is a foolish and even dangerous argument, popular only with those determined that the center should not hold. In the process, they have come close to replacing the political center with a black hole. Now they want to drag the country across the event horizon into what they hope is a transhuman paradise of rainbows and unicorns. I wouldn’t be so sure that awaits us there.

via RSS https://ift.tt/2q5RX8d Tyler Durden

Uber’s Head Of Corporate Development Resigns Over Sexual Misconduct

More than a year after Uber co-founder Travis Kalanick resigned as Uber CEO following a string of sexual harassment scandals and general chaos, on Monday afternoon Uber’s head of corporate development, Cameron Poetzscher, resigned shortly after a Wall Street Journal article revealed more allegations of prior sexual misconduct in the office. An Uber spokesman on Monday confirmed Poetzscher’s departure to the WSJ.

Poetzscher’s resignation is effective immediately with the Journal reporting that Uber’s new CFO Nelson Chai is assuming Poetzscher’s responsibilities while the firm seeks a replacement. “We thank Cam for his four and a half years of service to Uber,” a spokesman said.

Last month, the WSJ reported that following complaints, an investigation by an outside law firm found the former biz dev head had engaged in “a pattern of making sexually suggestive comments about other co-workers, including describing which ones he would like to sleep with.”

In addition to making suggestive comments, Poetzscher had a consensual affair with a colleague, violating company policy because he took part in her annual review, the Journal reported, based on unnamed people said to be familiar with the investigation.

After the law firm reported on Poetzscher’s behavior, some members of an Uber internal panel called for his head, the WSJ reported. But Uber’s leadership elected to give him a formal warning, cut his annual bonus and put him through sensitivity training, according to the paper.

Then, after a number of months, Poetzscher was promoted to acting head of finance, reporting to Khosrowshahi, according to the paper. The company has since hired a new chief financial officer who is now Poetzscher’s superior.

Poetzscher was a trusted adviser to Kalanick’s CEO replacement Dara Khosrowshahi, and oversaw Uber’s biggest deals, like the $7.7 billion investment from SoftBank as well as the sale of its Southeast Asia operations.

In November 2017, Uber gave Mr. Poetzscher a formal warning, reduced his annual bonus, and mandated sensitivity coaching, according to the people.

In a statement to the Journal for that September article,  Poetzscher said he was “rightfully disciplined” by Uber. “I deeply regret and have learned from this error in judgment, and I am proud of how hard everyone at Uber is working to ensure our company is a positive, respectful, and inspiring place to work,” he said at the time.

An Uber spokesman told the Journal that Poetzscher’s behavior at the company had been fully investigated by the outside law firm, and that “appropriate actions were taken as a result.”

A few weeks later Poetzscher tendered his resignation.

In a separate matter, in 2015, a live-in nanny sued Cameron Poetzscher and his wife, Airbnb head of global operations Varsha Rao, claiming the power coupled sexually-harassed and under paid her for years while working at their $7 million home. Julieta Yang, 45, sued Poetzscher and his wife, alleging that she was the victim of sexual advances and innuendos when looking after their two children.

The Filipino mother-of-three, who moved from Singapore to continue working with the couple in 2013, has also suggested Poetzscher exposed himself, masturbated and asked for ‘handwork’ at the luxury San Francisco property.

According to the lawsuit, Uber’s head of corporate development repeatedly asked the housekeeper to rub his back with lotion and offered her extra cash for ‘massage services’.

The document added that Poetzscher, a former investment banker at Goldman Sachs, allegedly wanted to keep his alleged lewd behavior secret from his wife, while Yang cooked, cleaned and did chores for a flat weekly rate of $450.

Poetzscher and settled with the nanny later that year, with the couple not admitting to any wrongdoing, court records show.

via RSS https://ift.tt/2CZnBNe Tyler Durden

Trump Threatens US Will Increase Nukes Until Russia, China “Come To Their Senses”

After hours of closed door talks in Moscow between US National Security Advisor John Bolton and his Russian counterpart Secretary of the Russian Security Council, Nikolay Patrushev, Bolton told reporters that the United States has yet to take a decision on whether it plans to deploy missiles in Europe if the Intermediate-Range Nuclear Forces Treaty (INF) is scrapped. 

Bolton further said that he now understands Russia’s position on nuclear arms regulations and treaties much better, and added that more consultations on arms treaties are needed, while further denying prior Russian charges that a US pullout of the INF was an attempt at “blackmail,” according to Russian state media sources. He subsequently had a 90-minute meeting with Russian Foreign Minister Sergey Lavrov and later in the trip is expected to meet with President Vladimir Putin.

John Bolton shakes hands with Russian Security Council Secretary Nikolai Patrushev. Via RFE/RL

This comes following President Trump’s shock weekend announcement concerning the Reagan-era treaty with the Soviet Union, wherein he said after a campaign rally in Elko, Nevada: “We’re not going to let them violate a nuclear agreement,” and indicated, “We’re going to terminate the agreement.” The Guardian had the day prior to the Saturday statement revealed that Bolton – in what some described as an overreach of the position’s typical role – had been pushing Trump to abandon the Intermediate Range Nuclear Forces Treaty.

Moscow’s reaction on Sunday was fierce with Russia’s Deputy Foreign Minister Sergei Ryabkov warning that Trump’s pledge to “terminate” the treaty was “very dangerous” and that “[Withdrawal] won’t be understood by the international community, but [instead] arouse serious condemnation of all members of the world community, who are committed to security and stability and are ready to work on strengthening the current regimes in arms control.”

While in Moscow for his two day working visit with Russian officials, Bolton explained in an interview with the Ekho Moskvy radio station that the weapons systems the INF concerns are no longer exclusively operated by the US and Russia, but other countries like China and North Korea are in the process of producing and testing such systems. Thus, he said, the issue can’t be solved merely between the US and Russia, and has to be revised. 

He further cited “concerns” that Russia is in violation of the treaty but didn’t go into detail as to exactly how. Should the INF treaty collapse, the Strategic Arms Reduction Treaty (START) would remain one of last obstacles before uncontrolled nuclear proliferation. It is set to expire in 2021, and Bolton said that Washington has not formulated its position on START just yet.

Meanwhile, with Bolton in Moscow President Trump words were more direct as he spoke to reporters from the White House steps on Monday.

Trump said of the INF that “Russia has not adhered to the agreement,” and warned that the United States intends to build up its nuclear arsenal until “people come to their senses.” Trump was also addressing China, which both he and Bolton have implied to be part of any newly formulated nuclear arms control treaty.

In response to reporters’ questioning whether this is a “threat” Trump said:

It’s a threat to whoever you want to include China and it includes Russia and it includes anybody else that wants to play that game… [Russia has] not adhered to the spirit of that agreement or to the agreement itself.

He said of Russia failing to conform to either the letter of spirit of the treaty: “When they do, we will all be smart and we’ll stop. Not only stop, but we’ll reduce, which I’d love to do.” He added that the US has “more money than anyone else by far” – implying that he wouldn’t bluff and that, “You can’t play that game on me.”

However these latest statements by Trump won’t go down well in Moscow, where Russian officials will only take them as confirmation that this is indeed all about blackmail – or Trump’s classic tactic of “negotiating from an extreme” position in order to get a “better deal”.  

via RSS https://ift.tt/2Rawp65 Tyler Durden

Watch: Saudi Consulate Employees Burn Documents Day After Khashoggi Killing

The drumbeat of incriminating leaks from the Turkish investigation into the killing of Jamal Khashoggi has continued apace Monday afternoon. And in the latest salacious piece of evidence that appears to support the theory that Khashoggi’s murder was a premeditated act ordered by a senior official in his government, if not the Crown Prince himself, a Turkish TV station has aired footage showing employees from the Saudi consulate in Istanbul burning documents on Oct. 3, the day after Khashoggi disappeared inside the consulate and was never seen again.

Per Middle East Eye, Turkish television channel A Haber released on Monday a video seemingly filmed by a small drone of consulate employees throwing documents into a fire outside of the consulate building.

Turkish authorities haven’t commented on the latest video, which was shared by a number of Turkish news outlets. The identity of the individuals in the video and the contents of the documents they burned remained unknown as of publication time.

Meanwhile, Middle East Eye reported that five more Turkish employees of the Saudi consulate in Istanbul gave witness statements on Monday to investigators in the Khashoggi probe. That brings the total number of consulate employees interviewed to 25 – roughly 20 short of the 45 that investigators hope to interview.

On Saturday, Saudi Arabia officially admitted that Khashoggi had been killed inside the embassy during what they described as a “botched interrogation. However on Sunday, Saudi Foreign Minister Adel al-Jubeir appeared to walk back these claims, saying the kingdom didn’t know how Khashoggi died. There have also been conflicted reports about how Khashoggi’s remains were disposed of, with Saudi sources saying his body was rolled into a carpet and given to a local fixer to dispose of, while Turkish sources insist that he was cut into 15 pieces.

Turkish President Erdogan is expected to release more details about the killings on Tuesday. But evidence leaked on Monday suggest that Turkey will embrace a more aggressive tone.

via RSS https://ift.tt/2PObHZq Tyler Durden

Let Competition, Not Law, Determine Who Gets Into Harvard: New at Reason

The most telling development in the opening week of the court case putting Harvard College admissions on trial may have happened entirely outside the federal courthouse.

That was the announcement, timed exquisitely to coincide with the trial’s opening day, that Stephen Schwarzman would give $350 million to the Massachusetts Institute of Technology to create a new “MIT Schwarzman College of Computing.”

As a Philadelphia high school student in the 1960s, Schwarzman had wanted to go to Harvard College but didn’t get in, despite a post-rejection appeal call to the then-dean. He ended up going to Yale. Yale in 2015 announced its own $150 million gift from Schwarzman, prompting a wry New York Times op-ed by Michael Lewis about how Harvard needed to do better at picking winners. Schwarzman also has put $600 million—more than $100 million of his own money and another $500 million he is far along in raising—toward Schwarzman College and the Schwarzman Scholars program at Tsinghua University in Beijing.

Last month Harvard Business School, from which Schwarzman graduated in 1972, did announce a $5 million gift from the Blackstone founder, whose fortune is estimated by the Bloomberg Billionaires Index at about $13 billion. The Harvard Business School gift, in other words, is 1/70 of what he gave MIT. Another possible way to look at it, totaling up the Yale, MIT, and Tsinghua sums, is that Harvard’s decision not to admit Stephen Schwarzman was a $1.1 billion mistake.

Schwarzman’s gift to MIT was only the most recent in a series of reminders that Harvard exists in a higher education landscape that is highly competitive, from Cambridge to New Haven to China, writes Ira Stoll.

View this article.

from Hit & Run https://ift.tt/2AnwnlF
via IFTTT

China Rescue Fails To Save EU, US Markets – Banks, Builders, & Bud Stocks Battered

What did China do…

Of course, everyone is talking about Chinese stocks – CHINEXT is up 10% in two days… if you fall for this manipulated idiocy, you deserve all you get. This was the biggest 2-day jump since the rescue of Chinese stocks after August 2015’s devaluation crashed stocks…

 

European stocks opened with some China hope and some Italy hope but that evaporated rapidly…

Spanish stocks actually underperformed close-to-close but Italy’s was the biggest dump from the opening highs of the day…

 

China’s overnight manipulation sparked a panic bid in US stocks all the way into the cash open, and then the selling resumed…

But the S&P is now down 11 of the last 13 days with The Dow and S&P the biggest losers on the day…only Nasdaq managed to hold gains…

 

Small Caps tumbled (heading towards their worst month since Sept 2011) and have erased 2018 YTD gains…

 

Financials were the day’s biggest losers, tech outperformed…

 

Despite tech gains, NFLX continued to slide…

 

The VIX term structure remains inverted for the 11th day in a row…


 

The bloodbath in homebuilders continues…

 

Pot stocks continued to plunge since Canada’s legalization last week into a bear market – down 22%… this is the worst 5-session drop since inception…

And some of the individual names are collapsing…

 

Global Systemically Important Bank Stocks are collapsing…down 27% from its highs… weakest since Dec 2016 erasing almost all of the post-Trump gains…

 

Stocks and Bonds remain notably decoupled as selling remains the trend in both…

 

Treasury yields went nowhere today despite the panic bid and scramble to sell in stocks today…

 

10Y yields traded an inside day (lower high yield than Friday and higher low yield than Friday)…

 

The Dollar Index rebounded back up to 96, ripping higher after China closed…

 

Offshore Yuan tumbled after China’s stock markets closed – despite a notably stronger Yuan Fix…

 

And among all the markets, cable was the worst performing currency as hard brexit fears re-loom and despite dollar gains, the Rand, Ruble, and Real all gained…

 

Cryptocurrencies were largely fading lower for the last 24 hours…

 

Copper managed to barely hold on to the China ramp gains but PMs and Crude leaked lower on dollar strength…

 

Financial Conditions continue to tighten and suggest notable downside for stocks…

But there is one thing holding the indices up…as Bloomberg details, price reactions during earnings season so far are pretty evenly spread out by sector so far, but the one outlier is the newly revamped Communication Services. See the green dot on the far right of the matrix below to see the how stark the difference is versus all other groups.

It’s an extremely small sample size of only three reports so far (Netflix, Omnicom, Interpublic Group), but the aggregate surprise of ~17% and positive price movement of >7% is off the charts compared to the rest. It may be nothing. Just something to think about with some of the heavier-weighted members set to report this week, from Alphabet, Charter and Comcast to AT&T and Verizon.

Or to put it another way – as goes ‘Communications Services’, so goes ‘Murica.

via RSS https://ift.tt/2PNbGoz Tyler Durden

Pot Stocks Crash Most On Record

Last Wednesday when Canada officially legalized weed, pot stocks suffered one of their biggest drubbings yet as the news was sold. At least Canadian shareholders had a quick, easy and legal way to dumb the pain.

In retrospect, it appears that with a characteristic delayed reaction, the news was not sold enough, and on Monday pot stocks just suffered their worst day on record as the biggest U.S. pot ETF, the ETFMG Alternative Harvest ETF, plunged a record 11% on higher-than-usual volume, and down 20% from the recent “high.”

As shown in the chart below, the $750 million ETF, which uses the memorable ticker MJ, lost more than one-fifth of its value in the last five sessions as US equities slid.

Meanwhile, the Toronto-listed Horizons Marijuana Life Sciences ETF, with C$977 million in assets, dropped as much as 14% to the lowest since January.

The reason for the plunge is that many of the most closely followed names in the sector got crushed on Monday, with Tilray tumbling as much as 21%, followed by peer Aurora Cannabis’s 18% slide. As the chart below shows, the 5 day losses for most names have been roughly 20% with some dropping as much as 50% in the past week.

That said, a look at the big picture reveals no reason why pot investors should lose their monetary buzz: even after today’s drop, Tilray shares still remain up close to 600% from its July IPO.

via RSS https://ift.tt/2SbgDJA Tyler Durden

ZIRP Blowback: Savers Flee Banks’ Zero Interest Deposit Accounts

At a time when interest rates are finally increasing with some consistency, although about a decade too late, banking customers are finally taking their money out of non-interest bearing accounts and moving it to high(er)-yielding alternatives. This, as we noted in recently when discussing Wells Fargo’s latest earnings, will put pressure on many major banks’ profits moving forward.

The four big US money-center banks, Bank of America, Wells, Citigroup and JP Morgan, all reported a combined 5% drop in US deposits to non-interest bearing accounts in the third quarter. Customers took out more than $30 billion from these types of accounts in the 12 months leading up to June 30. This represents the first decline from these accounts in more than a decade, according to FDIC data reported on by the Wall Street Journal.

Most of these deposits are consumer checking accounts and business checking accounts. Banks like them because they are of no cost to the banks, who can use the money for loans which they than collect interest on without a corresponding payment. As rates begin to rise, the spread widens and non-interest bearing accounts become even more lucrative for banks.

That spread had continued to grow for the last couple of years, but customers are now starting to get wise to the fact that they could be earning meaningful interest elsewhere, and this has catalyzed a steady wave of outflows from these accounts.

Allen Tischler, a Moody’s senior vice president told the Wall Street Journal that “deposits that earn no interest are the crown jewel of the bank funding base. You start losing that and you end up not being able to benefit from future rate increases.”

In response to the Fed manipulating moving rates toward zero for nearly a decade after the housing crisis, many consumers opted not to move money from these accounts, as rates in money market and savings accounts were insultingly low (technically, non-existent).

Government also helped convince consumers to keep their money in these non-interest-bearing accounts by offering unlimited insurance for many of them in the years following the crisis. Many corporate customers took advantage of the fact that keeping money in non-interest-bearing accounts helped them avoid paying fees on other bank products and accounts. The savings in fees was often worth more than the interest they would have accrued with rates so low.

Over the last couple of years, banks slowly started to pay out slightly higher rates to wealthier customers and some corporate accounts, but by and large with a material delay and for the most part have avoided passing on the benefits of the rate hikes to most of their consumers. But the trend is slowly starting to change. Non-interest-bearing deposits are down to 26.3% of domestic deposits in the second quarter from 27.5% of domestic deposits a year ago. That amounts to roughly $30.6 billion dollars less moving into these accounts.

Gerard Cassidy, an analyst at RBC Capital concluded: “Non-interest-bearing deposits are the goose that lays the golden egg for a bank. Their decline is one reason the profit boost from rising interest rates will likely end over the next year or so.”

Meanwhile, as funds in conventional, zero-interest checking accounts begins shrinking, the winners will be those banks – such as Goldman Sachs, which are aggressively pushing to attract deposits with higher rates, such as the following:

  • Customers Bank: 2.25%
  • CIBC Bank USA: 2.16%
  • CIT Bank: 2.15%
  • Citizens Access: 2.12%
  • Goldman Sachs Bank: 1.95%
  • American Express National Bank: 1.90%
  • Barclays Bank: 1.90%

via RSS https://ift.tt/2PMt90f Tyler Durden