Banks stole $1.1 trillion from depositors when the Fed hiked interest rates.

FT: Banks stole $1.1 trillion from depositors when the Fed hiked interest rates. pic.twitter.com/RghhkeI8zq

— Peter St Onge, Ph.D. (@profstonge) October 24, 2024

When rates were low, banks were lending at 4% but paying you 0.2%. Then, when the Fed finally upped rates, banks kept 70% of the gain. We bail them out, they rip us off. – Wall Street Apes
Turns out banks stole most of the Fed’s interest rate hikes — $1.1 trillion worth – FX Hedge

The scandal is not just that the banks did not pass on to their depositors the high interest rates they were getting from the Fed to let money sit idle in cash accounts. It is that the Fed was paying them to keep that money from being loaned to the real economy. The Fed created the liquidity to bail out government deficit spending, then paid banks not to lend out what they received from selling Treasury debt to the Fed. That is the source of those windfall profits to banks and it came out of future remittances to Treasury, i.e., taxpayer funds. Since March 2022, the Fed has paid banks a half trillion dollars to prevent financial resources from supporting private sector economic activity. This is disgusting. Congress should get involved as the Constitution gives them the authority to regulate money, which they outsourced to the Federal Reserve as an independent agency. It’s time to have a hearing on this matter and bring this situation to light. The Fed’s practice of paying interest on the reserve balances of commercial banks should end. Fed’s high-rates era handed $1tn windfall to US banks – Judy Shelton