D'Amato Eyes Having Fed Pay Interest on Reserve

By Seiberg, Jaret | American Banker, February 27, 1997 | Go to article overview

D'Amato Eyes Having Fed Pay Interest on Reserve


Seiberg, Jaret, American Banker


Senate Banking Committee Chairman Alfonse M. D'Amato called for legislation Wednesday to let the central bank pay interest on reserve balances.

It is the banks' money, the New York Republican said, "and we should let them earn interest on it. I would ask some of my colleagues to consider joining in a legislative effort to do just that."

Sen. D'Amato said he is concerned that dwindling reserve balances-down 34% in a year, to $11.7 billion in January-would impede the Federal Reserve's conduct of monetary policy.

Fed Chairman Alan Greenspan, who was on Capitol Hill to present his semiannual report on the economy, said the central bank has always supported paying interest on reserves. "The problem is that would induce a fairly significant reduction in federal budget receipts," he cautioned.

Mr. Greenspan's comments came amid a discussion focused heavily on the economy. The central bank, he said, is on "heightened alert" for signs of inflation.

"We cannot rule out a situation in which a preemptive policy tightening may become appropriate before any sign of actual higher inflation becomes evident," he said.

The markets reacted to this threat of higher interest rates by pushing up the yield on the 30-year Treasury bond to 6.75% by midday, prompting a substantial selloff in bank stocks. Money-center banks were hit hardest; the S&P bank index fell 1.83% by 1 p.m. and ended the day down 1.46%, at 529.65. The Dow Jones industrial average fell 0.78%, to 6,983.18.

Shares of Citicorp fell $2.125, to $121.625; Chase Manhattan Corp. dropped $2.25, to $103.50; and Wells Fargo & Co. lost $2.25, to $313.75.

Bank economists are predicting a rate hike in the third quarter.

"He is setting the stage for an adjustment later in the year," said Anthony Chan, chief economist for Banc One Investment Advisors Corp. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

D'Amato Eyes Having Fed Pay Interest on Reserve
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.