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Author Topic: "Bernanke wants to eliminate reserve requirements"  (Read 1148 times)
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WhiskeyGirl
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« on: March 18, 2010, 08:11:23 PM »

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In sum, it says that Bernanke wants to eliminate minimum reserve requirements because it "impose costs and distortions on the banking system". Heres an excerpt:

Up until now, the United States has operated under a "fractional reserve" banking system.  Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest.  But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system". At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website....

I don't even want to fathom what would happen if Bernanke succeeded in removing minimum reserve requirements.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=355494&t=01000344307283955476

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#9) On March 18, 2010 at 4:58 PM, oldfashionedway  (48.33) wrote:

    "Change you can believe in..."

    The 'minimum reserve requirements' have been replaced by electronic funds transfers and the printing press.

    Heaven help us.

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#14) On March 18, 2010 at 7:31 PM, outoffocus  (< 20) wrote:

    neutrinoman

    Yea it does makes sense.  The big banks have such a sweet deal with the Fed they don't even want new deposits (of real money).  If thats not a sign of trouble I dont know what is.
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