Fed’s rate policy leaves no relief for Main Street banks

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Dispatches recommended by Camden R. Fine:

In my view, the Fed’s policy is nothing more than a backdoor bailout for the Wall Street mega-banks and investment houses; it amounts to the back of the hand for the community banks of this country. The Wall Street money houses are basically getting free money that they can hedge and arbitrage worldwide to make baskets of money, while local banks are stuck with deposits costing more than the federal funds rate, sluggish loan demand and a 2.20 percent 10-year Treasury. For the extended future, earnings contractions will accelerate as the investment portfolio prepays and runs off, and capital will be difficult if not impossible to raise, stifling growth on America’s Main Streets.

The more than 7,000 community banks in this country did not create this crisis, but they have been asked to pay for it over and over again. Surely the Fed has more bullets in its monetary policy arsenal than turning its guns on the very players in our economy that create jobs and support small business. Once again, Wall Street gets a bailout — on the backs of Main Street’s banks, small businesses and hardworking Americans.

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