A STRAW IN THE WIND
For those of you with a bank savings account, I needn’t remind you of the pathetic interest income you’re currently receiving. There was a time, not that many years ago, when most institutions paid annual interest on deposits in the five percent range. This meant if you set aside $10,000 in your account, you’d receive $500 each year. For those of you who managed, by dint of Herculean effort, to accumulate $100,000, you’d have $5,000 coming in each year to do with as you wished.
Those sorts of interest returns have not been seen since our nation emerged from the Great Recession some eight years ago. Among the factors responsible for the virtual disappearance of interest were the Federal Reserve Board’s program dictating an infinitesimally low prime rate, the dissolution of massive numbers of community banks and, above all, the effects of the 2,318-page Dodd-Frank legislation which transformed banking into a virtual subsidized government monopoly. As a result, interest bearing accounts in excess of one percent annually are rare, with the vast majority of them offering rates as low as one-half of one percent.
It’s for this reason I did a double take when I spotted a newspaper advertisement on 11/1/17 offering an FDIC insured Certificate of Deposit with a six month term and an annual percentage rate (APR) of 4.70%. I felt it must either be some sort of devious scam or a typographical error. I quickly made a appointment with a rep who assured me the offer, though restricted to the $15,000 limit mentioned in the ad’s fine print, was genuine. The firm offering the investment is Sun Cities Financial Group, with Southern California branches in Orange, Laguna Hills, Los Angeles and Glendale – though its main office is in Sun City, Arizona. Evidently they’re willing to compete aggressively to attract capital which they believe can be productively employed.
I’ve titled this article “A Straw in the Wind,” for if one firm can oversee its investments effectively enough to enable it to offer this sort of return, there will be others to emulate them. America did not become the economic leader of the world by permitting government to permanently stifle enterprise. It’s my belief that despite the heavy-handedness of the bureaucracy, individual initiative will reassert itself. If there’s a moral to be made, perhaps it’s a reaffirmation of the timeworn adage which declares: “They pretend to enact fair and equitable laws and we pretend to comply with them.”