Thursday, March 16, 2017

And the WIN goes to the banks, AGAIN!

Banks are in no rush to pay savers and depositors more, or anything for that matter, they wasted no time in piggybacking on the Fed's rate hike by boosting their own Prime Rate, the interest that banks charge their most credit-worthy customers. To be sure, the vast majority of borrowers pay vastly higher interest rates, but Prime - like Libor - serves as the floating benchmark for many, if not most now that Libor is defunct, outstanding secured and unsecured loans, including credit cards and mortgages.
It is those borrowers who may be interested to know that as overnight, virtually every bank has now increased its Prime rate from 3.75% (where it was after the December rate hike) to 4.00%, oh and they have no obligations to notify debtors of the increase
Among the banks who have announced an increase in their Prime rate are the following:
And while savers are once again getting the shaft, and major beneficiary of yesterday's Fed rate hike will be... the banks again. Recall that the Fed pays lenders Interest on Excess Reserves, or IOER, which as of today is 1.00%. And since currently there is $2.13 trillion in outstanding bank excess reserves (a number which fluctuates depending on whether banks are using other Fed liquidity conduits at any given moment), it means that as of today, the Fed will pay banks $21.3 billion in interest on reserves every year (assuming the Fed does not hike more), an increase of just over $5 billion from the $16 billion in annualized interest banks were received from the Fed until yesterday.

At one time long ago I worked for a massive bank.   Had a good boss. He is probably still whipping his bankster brokers into a frenzy to "help" the blue hairs.  Don't you find it amazing that over the last decade America has added $10,000,000,000,000 in debt and kept fed fund interest rates around 1% and still can't get an economic recovery going? The blue hairs didn't stand a chance then and they sure don't now.  Work a lifetime and a bank gives near zero interest on your money. Thank you Janet Yellen very much.         

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