The basic business model for banks is quite simple – take in deposits and then lend that money, hopefully paying less interest on the deposits than you’re earning on the loans.

But the record-low interest rate environment has upset the apple cart, making banks push depositors away, The New York Times reports.

Part of the problem is that loan demand is very weak, so it’s hard for banks to charge a high interest rate on loans.
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And if banks buy short-term Treasurys, they’re lucky to earn more interest than they’re paying to depositors.

(Getty Images photo)

The average interest rate for a checking account recently stood at 0.5 percent, according to Bankrate.com. That’s far higher than the 0.11 percent rate on one-year Treasury bills.

Bank of New York Mellon has threatened a 0.13 percent fee on deposits of more than $50 million.

The average Joe also is seeing his money shunned. “We just don’t need it anymore,” Don Sturm, owner of American National Bank and Premier Bank, tells The Times. “If you had more money than you knew what to do with, would you want more?”

This cycle of unwillingness to take risk is weighing down the economy.

“The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more [of all those],” former White House economic adviser Larry Summers writes in the Financial Times.