banks pay zero interest on chequing accounts and pay prime. lend at retail or mortage rates. 50% profit spread. risk is loan default. bad loans. banks been getting too many bad loans. bank is insolvent when too many bad loans or bad investments.
Even if everything said in thread were true about the Fed.... I would still support them. The alternative is what? Look around the world. As a matter of fact, Thank you Fed. Bernake is in a box, what do you want him to do? Trade around the box