Fed Seen Paying Banks $77 Billion

Interest payments to banks (for money held on account wit the Fed) could rise from $1 billion in 2012 to $77 billion in 2016. Link to Bloomberg article.

“Essentially the Fed paid the banks $4 billion last year, which is about $12 per American,” David Howden, a professor of economics at Saint Louis University’s campus in Madrid, Spain, said in an e-mail.

Howden analyzed interest on reserve payments so far for the Ludwig von Mises Institute, named for an Austrian free-market economist and philosopher.

“If your bank called you up and said you have a new service fee of $12 because they screwed up in the crisis, you’d be livid, but that is basically what they are doing and no one knows about it.”

William C. Dudley, president of the New York Fed, has said interest payments on excess reserves are “not a subsidy to the banks.”


  1. I am a bit confused about the promotion of David Stockman and his new book by the Mises Institute. He appears to be an Austrian Economist, but when he appeared on the Bill Maher show he clearly stated as a right winger he was proud to say that he was for abolishing the Second Amendment. He then went on to ridicule that anyone who thinks that Patriots can stop government tyranny with the modern equivalent of flint lock rifles, as compared to modern military technology, was really deceiving themselves. He then went on to give the solution as what can only be described as pure democracy. Apparently he understand absolutely nothing about the Natural Law and is an enemy of the Republic and is using his media status to undermine liberty. Don’t do anything that will give any of you hard earned cash to this statist shill ; that especially means do not buy his book. What value can can there be in it if the man is really that ignorant?

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