Word: passbook
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Dates: during 1980-1989
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...some $52 billion, much more than expected, had flowed into money-market deposits. Reserve Board officials estimate, however, that only one-sixth of the cash came from money-market funds or other sources outside the banks. The rest of the money was transferred from lower-interest bank deposits like passbook accounts. Thus the banks are simply paying higher interest for money that they already had. Some institutions are having much greater success than others at attracting new customers. San Francisco's Bank of America, which has offered 11¼% on money-market accounts plus a $100 bonus for deposits...
Some industry observers warn that the money-market accounts could do the ailing S and L industry more harm than good. They fear that customers may simply roll much of the $90 billion still in 5½% passbook deposits into the new investments. That would sharply drive up the thrifts' costs without bringing them more money...
...sale in surrounding neighborhoods. The next alcove is Dean Witter Reynolds, the big brokerage firm that Sears also acquired last year. Clients there can put money into stocks, bonds or money-market funds. In California, where Sears owns the Allstate Savings and Loan Association, customers can even open ordinary passbook savings accounts...
...recent years, both the way people save and the way the Federal Reserve does its job have undergone radical changes that help explain what is happening to interest rates. A decade ago, the typical American saver was content to earn 4½% or less in a passbook account, which was the maximum allowed by law. In the 1970s, double-digit inflation arrived, and the passbook account became a bad deal. Money quickly lost its purchasing power when it was saved at 4½% interest while prices rose at a 10% clip...
...real enthusiasts will reap the rewards-like the Manhattan dowager who a few years ago sold her signed first edition of A Tale of Two Cities. Told that the money would have appreciated more in a savings account, she replied, "But I so much prefer reading Dickens to my passbook." Of course, if she had chosen the right time to sell, she would have been able to read both with equal delight. -By J.D. Reed