We’ve already noted a number of ways that the Fed helped the banks and the bankers, especially in the crisis. The Federal Reserve lends to the banks at very low interest rates, rates that, especially in times of crisis, are far below the market rate. If a bank can borrow at close to zero, and buy a long-term government bond yielding, say, 3 percent, it makes a nifty 3 percent profit for doing nothing.13 Lend the banking system a trillion dollars a year, and that’s a $30 billion gift. But banks can often do better—they can lend to triple A–rated firms, prime customers, at much higher interest
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