Why did the Federal Reserve bend the rules so far to allow banks to escape reserve requirements?
June 1993s Federal Reserve Bulletin explains the benefits which the fed was looking for by eliminating reserve requirements.Requiring depositories to hold idle, non-interest-bearing balances is essentially like taxing these institutions in an amount equal to the interest they could have earned on these balances in the absence of reserve requirements.There you go. The fed let reserve requirements become a joke to eliminate the unfair tax on depositories (ie: the banks now receiving trillions in taxpayer bailouts). It is SUCH a good thing that the fed was on the ball and had its priorities strait about protecting the American people. Reserve Requirements should be lowered to zero Congress should pass a bill officially lowering reserve requirements to zero. This would end the farce of deposit reclassification (and hopefully deal a deathblow to this industry which has profited by weakening our financial system). Furthermore, there would be no adverse impact to eliminating reserve requireme
