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Banks Use $1.77Trillion To Double Treasury Purchases

Monday, August 20, 2012 - 11:13 AM
According to a Bloomberg article, the gap between U.S. bank deposits and loans is growing at the fastest pace in two years, providing lenders with more funds to buy bonds and temper the biggest sell-off in Treasuries since 2010.  Federal Reserve data show that deposits increased 3.3 percent to $8.88 trillion in the two months ended July 31, business lending rose 0.7 percent to $7.11 trillion.  

The record gap of $1.77 trillion has expanded 15 percent since May, the biggest similar-period gain since July, 2010. Banks have already bought $136.4 billion in Treasury and government agency debt this year, more than double the $62.6 billion in all of 2011, pushing their holdings to an all-time high of $1.84 trillion. 

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5
pearlbrownpearlbrown1,438 posts since
Nov 2, 2010
Rep Points: 6,274
1. Monday, August 20, 2012 - 6:01 PM
Did I read that report correctly?  Banks don't have enough loans coming in so they need to "invest" their tons of cash! What if they make the wrong investment decisions?  That is basically OUR money they are using!  Where is the Fed in this?  Are they making sure those so called investments are safe?  Things are sure in one heck of a mess!
1
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,011
2. Tuesday, August 21, 2012 - 12:22 AM
Did I read that report correctly?  Banks don't have enough loans coming in so they need to "invest" their tons of cash! What if they make the wrong investment decisions?  That is basically OUR money they are using!  Where is the Fed in this?  Are they making sure those so called investments are safe?  Things are sure in one heck of a mess!

No, you apparently didn't read it correctly. Read it again. The banks are using YOUR deposits to buy Treasury Bonds and similar government debt, about as safe an investment as you can get.
4
dunkerdunker136 posts since
Jun 11, 2010
Rep Points: 409
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