When the Fed undertook a series of quantitative easing operations to control interest rates and lift the economy out of the Great Recession, it began paying banks interest on bank reserves. As the Fed raised the interest rate paid on reserves, new specialized banks formed to capture that interest. The Fed has resisted opening accounts for these new banks, triggering legal action. To avoid paying these new institutions, the Fed has proposed rule changes that will allow it to pay banks different interest rates, including zero interest to banks the Fed deems to be a risk to the system. Should the Fed be allowed to discriminate to prevent entry and innovation? Join AEI and a panel of experts for a discussion on these issues.
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