"The days of cheap money are over," | RBC
This additional quote from Nixon of RBC pretty much answers the question in our last post.
Credit crunch fallout will cast a long shadow
“The days of cheap money are over,” said Gord Nixon, Royal Bank’s chief executive officer. If anyone would know, he would.
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That means the banks’ own cost of money is likely to stay high. The credit crunch was a useful reminder to bankers of the value of a large, stable base of retail deposits. The institutions that failed – Northern Rock and Bear Stearns – didn’t have it. Everyone else wants it and they’re going to have to pay for it. That could work to savers’ advantage, but for borrowers, it’s nothing but grim news. The banks will pass on their elevated funding costs to the customers.
