Monday, January 18, 2010

Did the fibbies save the banks at the expense to retirees?

The New York Times has an editorial Monday Jan. 18, “How Retirees Saved the Banks”, p. A18, link here.

Banks are filled to the brim with deposits, since investors have pulled out of many equities and real estate markets. But because the Federal Reserve has pushed down interest rates so low, banks can borrow cheaply. But they have not been lending to consumers and small businesses (the business credit markets are still weak) and they have no reason to pay savers or depositors significant interest. This is particularly harmful to retirees who depend on Social Security, which did not go up this year (although Part B supplemental premiums did increase, as did Part D (for me), and Part B basic increased very slightly).

The Times writes “The effect of the financial crisis on retirees — and planning for retirement — has been largely overlooked. It deserves a high place on policy makers’ agendas.”

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