Wednesday, October 22, 2008

Banks Beneficiary of Latest Bush Corporafornication

The CorporaWhorehouse at 1600 Pennsylvania Avenue keeps doling out the goodies. The latest surprise came from a bump in the interest paid to banks by the Federal Reserve Bank. Before the Wall Street bailout bill, banks got no, as in zero, interest on excess reserve balances held by the Fed.

Starting October 9, the Fed began paying interest on excess balances using a formula. Two weeks later they improved the formula, netting banks and additional .4% return, courtesy of Uncle Sam.

Did your bank call and raise your savings rate or interest checking account by a corresponding amount? I didn't think so. Many plan to use the recent cash infusion to buy other banks, instead of loaning it out (the intent of the injection). More Bush driven Corporafornication!