Busted: Bankers and The Global Economy

November 1, 2010

Federal Reserve Adds Bank Fees to Fatten Profits

Filed under: banking, business, corporatism, credit, economy, federal reserve, globalization, government, money — digitaleconomy @ 9:54 am

 

Fed ever hopeful

Today, the Federal Reserve Board announced the approval of fee schedules, starting January 3, 2011, for services the Federal Reserve Banks provide to depository institutions, a kind of double taxation. The Board also approved maintaining the current earnings credit rate on clearing balances.

The “Reserve Banks” (12 in number) project that they will recover 102.0 percent of their priced services costs in 2011, recovering all of their actual and theoretical expenses, while earning a profit that is above their return on equity. Part of this “need for fees” has been justified through the electronic collections system in banking. As more consumers and banks use paper checks less and because fewer checks are being processed through their system, as expected, they will bring their profit expectations more in line with previous years. The real issue in profitability is that consumers are no longer having check return fees issued against them for lack of account funding. As a result, the Fed has seen profits drop 20 percent. Now, we have the admission by the Fed that they were behind the rise of banks covering deficient bank balances in exchange for fees.

The Fed also approved the 2011 private-sector adjustment factor (PSAF) for priced services of $39.5 million. The PSAF is a “theoretical fee” based on the allowance for income taxes and other imputed expenses that would have been paid and profits that would have been earned if the Federal Reserve was allowed to operate as a regular commercial bank. Their excuse? The Monetary Control Act of 1980 requires that the Federal Reserve establish fees to recover the costs of providing priced services over the long run, as well as “promoting competition” between the Reserve Banks and private-sector service providers. It’s all about the money. As usual, the Fed, like other bankers, never create enough credits to keep them happy. The corporate oligarchy of central bankers continues to run amok as they give themselves more authority.

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