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Financial Times discovers that the Federal Reserve serves only the banking industry
Fed's High-Rates Era Handed $1 Trillion Windfall to U.S. banks
By Stephen Gandel and Joshua Franklin
Financial Times, London
Sunday, September 22, 2024
U.S. banks made a $1 trillion windfall from the Federal Reserve's 2 1/2-year era of high interest rates, an analysis of official data by the Financial Times has found.
Lenders got higher yields for their deposits at the Fed but kept rates lower for many savers, the review of Federal Deposit Insurance Corp. data showed. The boost to the U.S.'s more than 4,000 banks has helped pad out profit margins.
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While rates on some savings accounts were raised in line with the Fed's target of more than 5%, the vast majority of depositors, especially those at the largest banks, such as JPMorgan Chase and Bank of America, got far less.
At the end of the second quarter, the average U.S. bank was paying its depositors interest at the annual rate of just 2.2%, acccording to regulatory data that includes accounts that do not pay interest at all. This is higher than the 0.2% they paid two years ago but far lower than the Fed's 5.5% overnight rate that the banks themselves can get.
At JPMorgan and Bank of America, annual deposit costs were 1.5% and 1.7%, respectively, according to this data.
Those lower payments to depositors generated $1.1 trillion in excess interest revenue for the banks, or about half of the total dollars banks brought in during that time, according to the FT's calculations. ...
... For the remainder of the report:
https://www.ft.com/content/4c013d3b-796b-47a3-a964-02f753d39846
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