OUTRAGE OF THE DAY: Do You Realize That The Government Is Still Paying Banks Not To Lend...?
Henry Blodget | Aug. 17, 2011, 12:10 PM |
One of the most outrageous "open secrets" of U.S. government policy these days is that the Federal Reserve is still paying big banks not to lend money.
And it's doing that while screwing average Americans who have been responsible and lived within their means.
Huh?
Seriously:
The Federal Reserve is quietly continuing with one of the many outrageous bank-bailout programs it initiated during the financial crisis--the one in which it pays big banks interest on their "excess reserves."
What are "excess reserves"?
Money that the banks have but aren't lending out--money that banks are just keeping on deposit at the Fed.
The Fed is paying banks 0.25% interest on this money.
0.25% interest may not sound like much, but it's more than the banks are paying you to keep money in your savings or money-market account. It's also more than you'll earn if you lend the Federal government money for 2 years.
Oh, by the way, why, exactly, are you earning so little interest in your savings accounts and money-market funds?
Well, because, thanks to another one of its bank-bailout programs, the Fed is keeping short-term interest rates at zero.
In other words, the Fed is paying banks not to lend money and screwing you, American citizens, because you're dumb enough to have saved money.
This is just so bass-ackwards it's not to be believed.
Why on earth is the Fed paying banks not to lend? Well, back in the financial crisis, the Fed wanted to find ways to secretly bail out the banks without it being screamingly obvious to every American that that was what it was doing. And this particular bailout program was one of the more successful ways it discovered of doing that. Over the past few years, this program has secretly funneled about $10 billion in risk-free cash (rough estimate) directly to the banks, just for being banks and not lending. Don't you wish you could get in on that game?
Read more: http://www.businessinsider.com/government-paying-banks-not-to-lend-2011-8#ixzz1VPzrxOMJ
http://www.businessinsider.com/government-paying-banks-not-to-lend-2011-8
It's called transfer of wealth. They do this on a large scale every 20 years or so and on a megga scale every 80 years or so. The idea is to get hold of the real assets from the people. By tightening the money supply they force people to sell to them or forfeit property at reduced prices. This has been done before. Read some history books.
I might not believe this. However I have a friend at work, his daughter was a mid manager in a large bank in Texas. Had huge clients all over the USA was very friendly with a lot of them. She had spent a lot of time building clients in her time she was there. They had money to lend but there was a rock on it. Her job turned in to just say no and avoid calls. They continued to go to work and be unproductive. Shuffled papers a lot, all her friends from these companies they lent to disappeared. Zero Productivity equaled very unhappy jobs. She is now managing an up scale clothing store in San Antonio and loving it.
I do not know if this is connected to what you posted Sassy but I am suspect...
I believe this
I just refinanced for a lower interest rate
All my credit scores are over 800 (the lender said there were only 2 others that were "triple 8" in the last 4 years that he had worked with)
It was incredible the hoops I had to jump through to get the loan
I blew up when the wanted my last 3 months of checking account records and to 'prove' my deposits were 'real'
I said "OK the deal is off, screw it"
"OK OK OK just send in the check for the overage and we can do it"
I can't imagine what a more average credit score would have to go through .....
Quote from: Windpower on August 18, 2011, 07:13:29 PM
I believe this
I just refinanced for a lower interest rate
All my credit scores are over 800 (the lender said there were only 2 others that were "triple 8" in the last 4 years that he had worked with)
It was incredible the hoops I had to jump through to get the loan
I blew up when the wanted my last 3 months of checking account records and to 'prove' my deposits were 'real'
I said "OK the deal is off, screw it"
"OK OK OK just send in the check for the overage and we can do it"
I can't imagine what a more average credit score would have to go through .....
800+ is amazing. We are in the high 700's, and no matter what we do, it does not budge.
Quote from: Windpower on August 18, 2011, 07:13:29 PM
I believe this
I just refinanced for a lower interest rate
All my credit scores are over 800 (the lender said there were only 2 others that were "triple 8" in the last 4 years that he had worked with)
It was incredible the hoops I had to jump through to get the loan
I blew up when the wanted my last 3 months of checking account records and to 'prove' my deposits were 'real'
I had a triple 8 until I tried to finance some land. I gave them everything but the kitchen sink to document my income, they all blew off 2 years of tax records and bank statements as "insufficient" documentation. Finally got my land with a Home Equity loan and I'm paying that off as quick as I can before they decide to send interest rates back to the moon.
I'm not a fan of banks but this doesn't sound quite right.
Are the excess reserves in question the increased reserve that we required the banks to keep in the wake of the meltdown? If so, when we took that money off the table and denied them use of it... that does have a cost, it is a taking and some compensation is due.