Fed Seeks Approval to Pay Interest To Banks

Fed Seeks Approval to Pay Interest To Banks

online.wsj.com

The Federal Reserve is formally asking Congress for authority -- starting this year -- to pay interest on commercial-bank reserves, in an effort to gain better control over interest rates and more leverage to battle the credit crunch.

Senior central-bank staffers broached the subject earlier this week with the congressional committees that oversee the Fed, people familiar with the conversations said. Fed Chairman Ben Bernanke is expected to request the new authority in writing soon.

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Ok so lets give a little more taxpayer money to the banks. Let me explain this the best I can. When you are a bank you have to give X amount of dollars to the FED in a reserve account. Then you can lent so many time the amount in that reserve. Basically that money in there you can lend a lot more than what is in there plus you have the backing of the FED in cases like we have now.

So now on top of all the perks of having the money in there we are going to pay these guys interest and guess where that money comes from...the treasury and guess who gets stuck with the bill ...us. Just another way to give the banks a little more...Im seriously thinking of opening a bank and I really mean that all these perks I mean hell....give me some opinions because once again I might be making a mountain out of a manhole.

online.wsj.com
(visit the link for the full news article)