When do the banks hit bottom?

I first reported in January on a little-noticed report issued by the Federal Reserve showing that American banks were borrowing all of their required reserves. In other words, if the figures were accurate and I understood the chart, it appeared that borrowed cash was keeping America’s banks afloat.

As I noted, the numbers were so different from those recorded over the entire period of time since the Fed began compiling them in 1959 that I wondered if this is an event of historic proportions.

Well, since I last wrote about this six weeks ago, things have gotten worse:

Reserves of depository institutions (in millions)
Date Total Nonborrowed Required
Dec. 5 44359 44160 42536
Dec. 19 38676 34843 37507
Jan. 2 46731 11424 44349
Jan. 16 39987 -1390 38276
Jan. 30 47966 -2424 46506
Feb. 13 40965 -19137 39306
Feb. 27 44887 -15312 43088
Mar. 12 40543 -19687 39133
Mar. 26 44533 -61732 39912
Apr. 9 42565 -101385 40329

To summarize: Since 1959, when the Fed started reporting this data, it’s rare to find a month in which the difference between the total reserves of the banks in the Federal Reserve system and their non-borrowed reserves is greater than about 7 or 8 percent. And suddenly, since December, those reserves have disappeared. Our financial institutions have borrowed all of their required cash reserves and over $100 million dollars more.

Maybe it’s just me, but I’d like to see the media report this story instead of feeding me more of the Hillary/Obama soap opera.

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