That's because high yield bank accounts are a phenomenon of the last 6 months and retail by and large hasn't got the message yet. 0.01 is not likely to last forever, and the TBTF banks are losing deposits.

Walked by a chase branch, they had some advertisement for a 4% cd.

So Apparently the big banks are starting to feel the account drain.

Also brokered cds from the likes of Wells Fargo and similar can be 5%.

Big banks definitely are starting to feel it

CD’s are not the same thing as demand deposit accounts. They’re less liquid than treasuries.

My credit onion is offering 3.1% on the savings act which is lower but isn't insane.

That's the problem, you need to open an account with a credit shallot instead.

High yield bank accounts was also something that suddenly appeared before the 2008 financial melt down. Now that they are appearing again I can be completely confident that we will see a huge economic depression. All man made of course - this could go away if it wasn't for the evil side of human nature.

Exactly right. People want reliability and stability from "household names" and they're go to banks that are offering fundamentally worse products[1] in order to get it.

1: At least in savings. The larger companies have insane credit card deals.

That’s still positive. If they want no risk, that number needs to be negative to cover the costs of holding and moving money around.

It really doesn’t. They charge plenty of fees to plenty of customers. They also use daily banking as a loss-leader for profitable services like loans.

Chase collected $1.25 billion in overdraft fees alone last year. My “Chase College” account currently gets charged $6/month for some reason I haven’t bothered figuring out, maybe a newly instated minimum balance or direct deposit requirement that wasn’t there years ago.

Great, so if it really doesn’t already, let’s just get rid of the pretense. Make it illegal to offer demand deposits while taking risks with depositors’ funds. No more need to worry about bank runs.

It's almost like the glass-steagal act had a good approach for the average person.

Eh, this really seems like moving the goal posts.

The problem with SVB &other is not that they fundamentally were losing money. They just weren't making _enough_ money so they took on additional risk. If SVB hedged the IRR they wouldn't have gone bankrupt; they just would've had less profit.

The banks people want are technically feasible.

There’s no way to provide risk free returns on demand deposits, other than the government just deciding to give away money. Hedging doesn’t magically eliminate risk at zero cost.

Sure, in the technically true way.

However, in practical terms banks have done a great job of making loans that get repaid more often than not. People are ok with having a bank that pays 0% interest and uses the difference between loan's rate and the real rate to operate successfully; bankers are not ok with leaving money on the table.

and they're not even making that fractional interest after they pay fees and buy addons.

This! I want my bank to be a place where I can place money to use for transactions. For returns I have my Vanguard account where I can pick investments for the risk/reward profile I want