Daniel B

The Banker: Not a Clue

Its supposed to be capital. It doesnt have to be "spent" per se. If they just keep the money in treasuries they are doing the right thing. It is supposed to increase the confidence of banks in each other. If I know a bank has $3 billion more than it did yesterday, am I more or less likely to lend to/trade with it? If I'm a corporate that has millions in bank acccounts, am I more or less likely to pull that money out if the bank has $3 billion more than yesterday? Its capital. Not spending money.