Banks Hoard $1 Trillion in Reserves…and the Federal Reserve "Solution"

[The Straight Story]

Banks Hoard $1 Trillion in Reserves…and the Federal Reserve "Solution"
Wednesday, December 30, 2009

American banks are sitting on nearly $1 trillion in reserves, holding onto money instead of loaning it out to homeowners and businesses which the federal government has wanted for the past year. Beginning in September 2008, when the financial crisis went super critical, banks went from $45 billion in reserves to more than $900 billion in just four months, thanks to Washington’s bailout efforts. The financial sector has continued to limit credit throughout 2009, reaching the point where the Federal Reserve is now proposing to sell term deposits to banks to absorb some of the banking system’s excess reserves. A term deposit is a short-term investment in which the investor receives a higher rate of return in exchange for an agreement to not withdraw the funds until the term ends.

Fed Chairman Ben Bernanke isn’t offering this program as a solution to free up credit to businesses and individuals, but to keep inflation from accelerating as the economy recovers.

http://www.allgov.com/ViewNews/Banks_Hoard_1_Trillion_Dollars_in_Reserves_and_the_Federal_Reserve_Solution_91230

[aquart]

1. Why is Bernanke allowed near our money?

[ixion]

2. good question...

:applause:

[Ikonoklast]

3. "Our money"?

I hate to be the one to break this to you, but it isn't 'ours' anymore.

Oh, you might get to keep it for a bit, but eventually, you'll have to give it all back to its rightful owners on Wall Street.

It's for the best.

[HBravo]

4. Greed

Hold the money and raise CC rates........unbelivable

[Taitertots]

5. The Fed is designed to screw us over

We bail them out which causes excessive reserves. To fix this they plan to take the money back and pay them a high interest rate.


How can they even say they are not stealing from us?
We lend them money at near zero interest, they lend the money back to us as term deposits at a high interest rate.

[FarCenter]

6. The money the banks received was to fill the hole left by bad loans they'd already made

not to make new bad loans.

The excesses of the 2005-2008 bubble period have to be paid for.