Rate Cuts at Ally Bank
With all the talk of Ally Bank being pressured by the ABA to cut deposit rates, I was hoping that Ally Bank would hold steady on its rates for a while. Unfortunately, that’s not the case. Ally Bank made some sizable rate cuts today. The savings account rate fell from 2.25% to 2.05% APY, the 12-month CD rate fell from 2.80% to 2.49% APY and the 9-month no-penalty CD rate fell from 2.50% to 2.30% APY. The largest rate cut was on the regular 9-month CD. That rate fell from 2.60% to 1.90% APY. Now there’s no reason to choose this classic 9-month CD when the no-penalty version has a higher rate.
And if an anonymous commenter who couldn’t provide specifics is to be believed, the pressure to cut interest rates on savings account and CDs is coming from Mr. Bernanke, the wise regulator who couldn’t see the housing bubble that everyone with half a brain was screaming was coming for years.
Do you need any more evidence that regulations are bad? Some regulations might be necessary, but they are necessary evil—it’s like bandages and scabs on your wound. You need those things at the moment to stop the bleeding, but if you always have bandages on your arm and have scabs here and there, well, something’s wrong with you, buddy. If we actually need regulation anywhere, then regulation is at best a treatment for symptoms and will only get more and more expensive with time. The problem has to be dealt with at the fundamental level.
An example people keep bringing up is the environmental issues. Sure, factories dumping wastes into the local air and water are terrible. Sure, regulation could help with these issues. But it doesn’t fix the underlying problem—that there are people who stand to benefit by being a little less careful with their surroundings and they have no incentive to be careful. But if you look more deeply into the issues, the government created these underlying problems. All that a government is empowered to do and is necessary to do is protect the sanctity of property (and by extension, lawful contracts). When it failed to do that, for whatever reasons, it created the problems that it is now somehow entrusted (by statists and leftists, anyway) to solve it. Talk about leaving the fox with the chicken!
Well. In any case, it looks like if Obama has his way, the middle class families with a little bit of income to save (but not willing to risk it in stock or even bonds) will be left with no option other than to watch their savings diminished by inflation, which is only bound to grow with the reckless spending that Obama administration has shown to be far too willing and able to do. As it is, even at the historical inflation rate of 1%, the current rate of about 2% at Ally Bank is barely enough to keep your money’s value at the exact some worth. If every bank was offering rates like 0.2% (that offered by many banks and even credit unions), you would be better off buying gold and burying it in the ground, rather than keeping the money in a bank and in circulation.
What would regulators do then? Outlaw buying of gold? Punish those trying to sell gold? Apparently your imagination is the limit.