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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)
DateTotalNonborrowedRequired
Dec. 5443594416042536
Dec. 19386763484337507
Jan. 2467311142444349
Jan. 1639987-139038276
Jan. 3047966-242446506
Feb. 1340965-1913739306
Feb. 2744887-1531243088
Mar. 1240543-1968739133
Mar. 2644533-6173239912
Apr. 942565-10138540329

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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