Dear Mr. Bernanke,
Please raise interest rates. You are forcing financial institutions to "innovate" different venues to make money, venues that are neither good for the institutions themselves nor their customers.
When interest rates are low, banks are not making any money on equity, which leads to less income, which leads to less revenues, which leads to layoffs, which leads to less spending, etc... As you've already seen, banks, for the past two years have raised interests on their credit cards, transaction fees, account fees, etc... to maintain revenue target while reluctantly lending. Why? Why would they want to?
Even with low interest rates, the average Joe still cannot afford the loan for the house that you think the low interest is supposed to help him with, simply because he has no job, as he has to contend with the raising cost of everything else in his life. He has no job because banks have to cut back, or not lending to that business that could have hired Joe because it doesn't make any economical sense to the banks to loan. It's a vicious cycle.
While the numbers may not look terrible, but that's because of cutbacks and not because of profits, that goes for most banks.
Most banks now sit on their cash reserves, waiting for even just half a point raise on interest so that more money can be made, legitimately. Yes, some of the regulations that have been enforced of late are debatable, but they can be sustained, only if you'd just raise interest rates.
So please, do us all a favor and raise interest rates, even if just half a point.
Sincerely,
Your average concerned citizen.
P.S the opinion expressed forth is my own and does not reflect that of my employer.
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