Not sure why you’re being downvoted, that analysis is correct.
Sounds like word games played by people in charge to have tax payer bailouts using two layers of obfuscation.
This is hurtful in more ways than one. Banks routinely charge all kinds of fees from account maintenance to whatever Wells Fargo did for years.
Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed.
Either what you say is true and the retail customers are insignificant, and banks must offer no fee accounts. If not, they can't block federal reserve from creating default USD accounts for everyone.
Or they are an important part of the bank's marketing strategy or whatever. In this case, banks must lose the ability to gamble customer funds.
Which one is it?
Actually the FED is opposed to this themselves. A company called the narrow bank was going to try this. The FED refused them a banking license, all the way to court.
The FED wants deposits reinvested into the economy.
> A narrow bank takes deposits and invests the money in interest-bearing reserves deposited at the Fed. Because that’s all these banks would do, they would be very low cost and hence could pass along to depositors the interest earned on reserves, minus a small fee.
> Narrow banks could attract many large depositors, who currently receive much lower interest rates on their deposits at ordinary commercial banks.
It feels like they were offloading their cost to a service that the government maybe offers at a loss.
Hence I believe the Fed was against this to keep the economy running by 'keeping money rolling'.
This proposal for narrow banking seems to employ the government as this vault, sort of like treasury bonds that can be freely withdrawn, which seems a more significant difference.
* I am not denying that this is what the feds claimed and/or believed
I'm fairly sure the poor aren't that affected by interest rates - the very definition of being poor is not owning much in the way of assets that could earn interest...
Assuming it's a one time charge and not a contagion, it sounds like why we have government and FDIC.
It's more the state government budget for about 1/3 of the states in the union
It might seem unfair that shareholders of random other banks have to pay for this but no more unfair than accountholders of SVB paying for it.
But the end result is the same: a tax on everyone to bail out Peter Thiel and friends.