Borrowing from customers lending to the gov't

Households are earning so little from their bank accounts that Bank of America, the largest U.S. lender, has pocketed about twice as much cash this year parking money at the Federal Reserve than it has paid to savings-account holders. -------------------------------------------------------------------- IT USED TO BE THAT BANKS BORROW FROM CUSTOMERS AND LEND BACK TO ITS CLIENTS AND OTHER... [more]

Households are earning so little from their bank accounts that Bank of America, the largest U.S. lender, has pocketed about twice as much cash this year parking money at the Federal Reserve than it has paid to savings-account holders. -------------------------------------------------------------------- IT USED TO BE THAT BANKS BORROW FROM CUSTOMERS AND LEND BACK TO ITS CLIENTS AND OTHER BUSINESSES(E.G. ACT AS A TRUE INTERMEDIARY BUT THANKS TO THE CENTRAL BANK THE POLICY IS TO PAY NO INTEREST TO DEPOSITORS, STARVE THE REAL ECONOMY AND BEEF UP THEIR OWN PROFITS BY PARKING MONEY WITH BEN BERNANKE--SOME RECOVERY --------------------------------------------------------------------- The North Carolina-based bank paid U.S. depositors a 0.43 percent interest rate last quarter, according to earnings documents the company released last week. Savings-account holders took home even less, with total interest on their accounts reaching just $32 million for the three-month period ending in March. Meanwhile, Bank of America raked in $63 million simply by stashing cash at the Fed. The nation's central bank only recently began compensating commercial banks for storing their money at the Fed as part of its response to the financial crisis. Thanks to Fed policy and banking industry consolidation, the largest banks are booking easy profits as households and businesses plow record amounts of cash to lenders despite a record-low rate of return. Rather than lending that cheap money out to consumers or small businesses, banks are either investing it or hoarding it at other institutions, where they earn a much higher rate than what they pay their own customers. http://www.huffingtonpost.com/2011/04/21/big-banks-book-easy-profi_n_852123.html [less]