Bailout Bill Allows Banks to Have ZERO Reserves

and here is part of what I put into the DP 'read the bill' collaboration thread:

Page 91

16 SEC. 128. ACCELERATION OF EFFECTIVE DATE.
17 Section 203 of the Financial Services Regulatory Re-
18 lief Act of 2006 (12 U.S.C. 461 note) is amended by strik-
19 ing ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.

According to my research of the Financial Services Regulatory Relief Act of 2006 this would mean that effective immediately the Federal Reserve Act would be amended to: (1) authorize payment of interest on funds maintained by a depository institution at a Federal Reserve bank; and (2) authorize the Federal Reserve Board to reduce to 0% the reserves required to be maintained by a depository institution against its transaction accounts. (The current requirement ranges from 3% to 14%.)

That second part sounds pretty sketchy to me, but what do I know.

I, like you, initially latched onto the '0% deposit' requirement as being very very VERY disconcerting, however after doing some more thinking on the subject I've refined my opinion a bit.

Currently banks are required to purchase specified non-transferable stock in their regional Federal reserve bank and to set aside a stipulated amount of non-interest bearing reserves with their respective reserve bank (since 1980 all depository institutions have been required to set aside reserves with the Federal Reserve...). The law they tried to pass allows banks to withdraw all of their money from their Regional Bank, but it also authorizes the Federal Reserve Banks to pay interest to banks who keep their money in the system (currently they don't pay interest for the deposits).

It seems to me that the purpose of the new law, is to try and get the banks to pool their resources more efficiently. It gives them access to the cash they've got deposited in the fed, (so if they're starting to get into trouble they have more options before they have to go beg the fed for money) and it rewards banks who put funds into the communal pot(conceivably so that banks who have lots of bucks laying around will put them at the disposal of the Fed... instead of making dubious loans, or sitting on the money and cutting the interest rates they give their customers.)

Anyway that's the rationale behind it (as far as I can tell). Here is what's wrong with it:

What happens if the banks say screw it I want my money? Sure letting banks pull their cash out of the Reserve Bank in order to solve their immediate financial problems might patch things up in the short term... but if enough of them do it then the Regional Banks will be left with less to lend. In fact if the regional banks have loaned out all of their reserves to troubled financial institutions, and their member banks start to pull their money then the entire federal reserve system could face *gasp* its very own liquidity problem!

Now ordinarily I wouldn't give a care. They ought to be able to live and die by their rules, but here's the problem: once again our enlightened leaders are going down the road of partial deregulation. They are giving private financial institutions with links to 'government sponsored entities' enough rope to hang themselves with without removing any of those apparently 'implicit guarantees' that go hand in hand with said entities. Sounds like we're just begging for another Freddie Mac and Fannie Mae style incident!

Now if we had explicitly stated that under no conditions would we ever bail out the federal reserve system and THEN giving them this sort of freedom, it would be fine. In fact it would be wonderful. But as long as we're linked to them in any way shape or form there is no way we should be considering this stuff.

Partial deregulation is NEVER the answer! Either go all the way or don't bother. (If you want an example of how partial deregulation can go horribly wrong go read up on California's energy crisis or see the Collapse of Freddie Mac and Fannie Mae)

bump for or survival against total global financial control

Help us out!

Now you understand the fraud that is going on in the banking and financing world.

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Freedom is a movement who's time has come. Our campaign will lead world wide freedom.

DailyKOS article to every Democrat that voted for the bailout last time. THIS may sway their vote more than our talk of the constitution.

I am going to try first thing in the morning to get the info into my reps hands before they bring the damned thing back up again.

We have to be on the offensive in this. They will bribing to get votes, we need to work to cause them to lose votes.

but that reeks of genocide

manipulate the masses into following along like sheep to the slaughter; I could see that the $700B was just smoke and mirrors that were being used as cover for their true goal. More power.

While the manipulated sheep focus on the $700B they slip their true goals into the other pages of this legislation. Than telling us if it doesn't pass the sky will fall and our whole economy will be destroyed by financial WMD's.

Sound familiar? Well it should, most of us fell for the same tactics, just a few short years ago.

Fool me once shame on you, fool me twice shame on me.

I won't mention the bank but I went in there to take out a few grand for "just in case" funds. They had to give it to me mostly in $20's because they were "out" of hundreds. So even they had a shortage of the worthless FRN's. Crazy times.

and asked them to pass it on........

So your telling me
1-I can have people give me money to hold
2-then I can take said money under new law and send it away (investing)[New Car]
3-then when you return I can have zero balance of your money but can give you someone else's to cover it.
4-Then someone else deposits money in my bank
5- the cycle is complete.

now he was talking about construction as if Contractors always barrow the money they make payroll with. I owned a construction company for 5 years I never took out one loan. I don't know what he is talking about. I don't think he knows what he is talking about either. These people want everything we do to be done on debt.

Live Free or Diebold

Time to start a bank! =p.

Call it "Dividing by Zero-Fractional Reserve Banking".

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They only required the reserve for DDA ("checking") accounts -- and with "sweep" accounts and "overbalance protection" and assorted other things, most banks have minimized that already anyway.

In addition, a LOT of banks have LESS than zero dollars on reserve... they simply have "borrowed" reserves (from other banks -- and for the past several months from the Federal Reserve... there was a link to a graphic somewhere on the totals of "non-borrowed reserves"... anyone got that link handy?)

P.S. For savings accounts, the reserve ratio has been zero for decades now.

I knew I should have been a banker.

Where else can you work so little to control so much wealth - created from nothing whatsoever????

Why any man or woman who actually does create wealth - creates value where none existed before - would not hold then onto that wealth and simply start a fractional reserve banking business on the side, is beyond me. That's where the REAL money is. Compound interest, baby.

Absolutely astonishing.

Those looting bastards have helped me to wake up even more people in the last couple of days than I would have been able to without them.

Thanks, you greedy bastards! Normally, it's not every day I get the joy of seeing the expression on another American's face when I tell them that the banks essentially make money out of thin air and then charge interest on it. This most recent power/money grab by you, the elite, has only made it easier for me to illustrate that point, and thus, enjoy seeing that expression a few times a day now.

Zero reserves...LOLz!

Now that's the bank I want to own....ha ha ha ha!

Zero? I'm not sure the banks will be able to provide enough "liquidity" with that serious a reserve requirement. Can't we get it a little lower?

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