Let’s get the bad news out of the way first. Not one of the six key certificate of deposit rate categories showed an uptick last week, according to the BankingMyWay Weekly CD Rate Tracker.
Some categories, like the two-year CD (down 18 basis points) and the four-year CD (down 19 basis points) fell particularly hard and fast, but there weren’t any stalwarts in the bunch, either.
The CD market is starting to mimick Bill Murray’s experience in Groundhog Day, when his character relives the same day over and over. But at least Murray’s character gets to hit reset when he wakes up every morning. Any bad news from one day is wiped away the next.
It's not so for CD rates, which go through the Groundhog Day-like rinse, clean and repeat cycle. However, CD rates can’t erase the steady losses from the week before.
It’s drastic stuff, so drastic in fact, that some financial pundits are asking Federal Reserve Chairman Ben Bernanke to step in and raise the rates that banks pay to their customers.
The idea, proposed by The New York Post’s John Crudele today, is that people would have more disposable income if banks were forced to raise their deposit rates. Crudele isn’t specific about how high that rate should be, though he does allude to consumers having an extra half-percentage worth of cash at their disposal.
Crudele admits that profit-hungry banks wouldn’t go for the idea, and that the stock market would suffer if bank rates rose. But the fact that the idea is being floated in the national media demonstrates how worrisome the situation is right now.
Additional bad news is that plummeting rates on fixed income investments are threatening America’s 36 million baby boomers facing retirement in the next 10 years.