Magazine article American Banker

VIEWPOINT: Catch Up with Reg Q Repeal

Magazine article American Banker

VIEWPOINT: Catch Up with Reg Q Repeal

Article excerpt

Byline: Randy Rosen and Zoya Lieberman

For many years, financial institutions have had to devise innovative solutions to provide their corporate clients with a variety of cash management services and to maintain account balances without being able to pay an actual interest rate.

The repeal of Regulation Q changed that. Restoring the ability to pay interest on corporate accounts has spurred the need to develop new product and service structures as well as new rate and fee pricing models.

Financial institutions have to design a new strategy for providing products and servicing their commercial clients.

In the last quarter of 2010 our company conducted a survey on the repeal of Regulation Q that included questions related to cash management services, investment sweeps, earning credit rates and Federal Deposit Insurance Corp. insurance. We aimed to capture the overall strategy that financial institutions were planning to deploy in 2011 and beyond. While it was too early to see any specific results of the repeal, it was interesting to observe the patterns and strategic thinking that emerged in this survey.

The vast majority of financial services providers are planning to use a rather conservative approach when it comes to making changes to their commercial products, which include cash management, earnings credit and investment sweeps.

In other words, financial institutions are maintaining the status quo with their product options. …

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