The banks generally maintain large excess reserves with consequent loss of potential profits.
The Fed, which had been widely expected to drain excess reserves from the banking system yesterday, chose instead to stay out of the market.
The banks had excess reserves, and lending rates were in the area of 26 to 29 percent, with few borrowers.
The excess reserve grew out of the 1986 overhaul of Federal tax law.
On March 20, 2013, excess reserves stood at $1.76 trillion.
But it does force down interest rates (like in Japan) as the banks try to clear their excess reserves.
The property has $52 million outstanding on its mortgage, which will have to be repaid to the city along with the excess reserves.
The only time the system has had excess reserves was during the Depression.
Between 1929 and 1939, excess reserves increased from zero to nearly 10 percent of total member bank deposits.
There might be an outside chance of option 5 - cutting the rate for excess reserves.
