That has everything to do with a zero bound federal funds rate, and nothing at all with how your bank operates. In the absence of historic low rates, it is technically impossible for banks to run those type of reserves following a period of unprecedented defaults/instability. Also, lending capability can be achieved via multiple mechanisms utilizing TALF and the discount window simultaneously. However, banks are afraid to loan to the sub prime borrower of which has began to represent more and more of the loan market as of late. But to state that banks will not lend because they are afraid, and wanting to keep "cash on hand" is misleading. The tools to make such loans are there, and the incentive (profitability) to do so has never been higher.Yes, check with your local banking sources. As a bank investor I have the bank's annual report in front of me. It tells me that at any one time it could have as much as 90% of its "Cash on Hand" in FED paper.
Care to link/clairify this statement? It seems a little fuzzy.That may be, but the FED is still holding on to the local banks' money and that helps it maintain credit lines for both private and government.
Are you stating that the Fed is currently purchasing Treasuries? You are aware they cannot purchase them directly from the Treasure?.?.?. So you must clarify this statement as well.Currently the majority of the out go seems to be Government, but we can't prove or disprove this because the FED is above approach and audit.
And we will not know until we begin to see some serious inflationary pressure.I agree that that is the theory and practice. As to how well it works, that is personal opinion and we probably don't agree on.
You side step my question in an attempt to go negative. How about the particular health of their industry? Does their desire to repay TARP say something about their ability to operate without government aid?So they can continue to collect income over $500,000 per year and maintain their huge bonuses? To get out from under the Government's Banking Czar's arbitrary, populist, and very visible public oversight?
No offense, but i would not call any of the three credible. Not by a long shot!Several:
InvestorCentric: Leaked Document Shows Fed Preparing For Next Mortgage Crisis
The Mortgage Lender Implode-O-Meter - tracking the housing finance breakdown, related to Alt-A and subprime mortgages, lending fraud, predatory lending, housing bubble, mortgage banking, foreclosures, debt, consolidation, lawyers, class-action lawsui - although maybe not exactly credible
Pam Martens: Judges Start Nixing Foreclosures - possibly the same
Again, reserves are at their height because of Fed actions, not on their own accord.I don't have too much more time to search for more, but I recall reading many MSN Money articles over the past few months detailing the fact that the new wave of foreclosures are people who lost their jobs and can no longer make the payments. Add in the new credit card rules coming up and banks are wisely building up their cash reserves.
GM and Chrysler were on the verge of liquidation, which is a national security matter as well as economic. Would your city/state have been better off with the two of them dissolved and liquidated. BTW, Michigan gets more than $4 million per week in unemployment benefits; can you explain how?Really? Bailout of GM and Chrysler? What bailout? Oh - you mean the forced bankruptcy of GM? You remember, where the President of the US fired the CEO of GM for saying that if the US wanted GM to go bankrupt then why did they lend any money to GM in the first place? In return for the $25 billion bailout money the US now owns about 59% of GM? That was no bailout - that was a straight up purchase of GM at a steep discount. And none of that money came to Michigan, it was mostly spent by the government studying how to break up GM as fast and profitable as possible. Michigan has received less than $4 million from the currently $157 BILLION handed out from the stimulus. Yep perfectly fair there.
I agree. However, do you subscribe to the thought that we should just "do nothing"?And I would have been there with the same opinion as you at the time. But politics is politics and unless palms are greased and pockets lined, forget it. Both parties are pretty much the same in that regard.