Archived In case you didn't know how banks; local, regional or federal, operate (imgoat.com)
submitted ago by ARsandOutdoors
Posted by: ARsandOutdoors
Posting time: 1.8 years ago on
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Archived on: 5/15/2019 10:00:00 AM
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Archived In case you didn't know how banks; local, regional or federal, operate (imgoat.com)
submitted ago by ARsandOutdoors
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[–] BloatedVoatGoat ago
They still have the liability ratio to maintain against the loans of 9:1. So they cannot make new loans using depreciating items like cars or non colletral loans but can against things that do appreciate like a home. So if you have paid down 10% on your home and have 20% equity they can write out 100% of the value in another loan. And with that we can see how housing broke the market.
[–] ARsandOutdoors [S] ago (edited ago)
Yes, technically they can only do that until they hit the reserve ratio number. Regardless if they act responsibly and stop once hit the target ratio, or they decide to blow right on through it down into the red, they can still put themselves in the black using the FOMC Fed. lending rate. At the end of the night, all the banks come together and re-balance their reserve ratios. The banks can either individually lend money to each other at the fed rate, or the banks can take money from the FED its self. Which in the past when the banks wasn't total jews, the banks didn't go to the FOMC to rebalance, and internally amongst other banks was looked at as though you didn't have your shit together. Today, that's not the case.
https://www.investopedia.com/terms/f/federalfundsrate.asp