Smarty_Pants

Fed Creates Bank Margin Squeeze

Big Wall Street banks can now borrow from discount window at no more than 0.25% and invest the same money in long bonds at 3+%. Short term discount loans can be rolled over indefinitely at FED, interest differential will build up bank equity over time until the long bonds mature.

In essense, it is a -3% interest payment to the banks on borrowed money, ie. a free gift of taxpayer money to the banks disguised as interest rate arbitrage. It also keeps most of the freshly printed money out of circulation for a while.

Everybody wins, except the taxpayer, which is what you might expect from any gub'mint program.