The Wall Street Journal wrote last week, "J.P. Morgan's Dimon Would Like Corporate Cash to Find a New Home". It said, "Deposits are the lifeblood of banks, so turning them away would be folly. Or so it would seem. J.P. Morgan Chase chief James Dimon suggests that may soon happen, at least when it comes to the business of holding idle corporate cash or nonoperational deposits. In his annual letter to shareholders, Mr. Dimon noted these are "hugely unprofitable," especially given new rules governing the amount of liquid assets banks must hold. As a result, Mr. Dimon wrote, "banks probably will minimize this type of deposit, and clients will seek other alternatives, probably in the money markets."" The piece continues, "So while executives might like to stop holding so much corporate cash, that service will likely stay in place as a loss leader. And, in the longer run, such deposits at banks will come down -- albeit for reasons other than that they have become a burden. A shift is likely to be driven by an eventual turn in short-term interest rates, prompting corporate customers to move money to capture yield. Many expected such an outflow would begin once the government ended unlimited insurance on noninterest-bearing deposits at the end of 2012. But by the end of 2013, such deposits at U.S. commercial banks had grown to $2.61 trillion, up 3% from the prior year and more than 50% over four years. This could be a testament to the continued belief the largest banks still are too big to fail -- so that even though the deposits are no longer explicitly guaranteed, depositors enjoy implicit government support. And with interest rates still at superlow levels, there just isn't enough compensation for corporate clients to take on the additional risk of moving money elsewhere."

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