Re:A Bank of One's Own
by solatic on Saturday March 11, 2023 @11:36PM
(#35116715)
This isn't actually true in the modern system; loans are generated by the bank taking a loan from the Federal Reserve at that interest rate, and then applying a markup that covers the cost of KYC, due diligence, customer service, and of course the bank's profit.
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If the depositors were willing to accept a lower rate than the federal funds rate, the banks make a bigger profit from the loan interest spread.
Therefore, it is always an incentive for a bank to attract deposits.
Re:A Bank of One's Own
by JumpCrisscross on Sunday March 12, 2023 @07:18AM
(#35118806)
> loans are generated by the bank taking a loan from the Federal Reserve at that interest rate
This is incorrect. Most bank assets are not Fed financed. (That’s the discount window and reverse repo operations.)