Recapping the day's news and newsmakers through the lens of CNBC.
The logic seems simple enough: the Fed keeps interest rates low so individuals and businesses can borrow, and their spending will lift the economy. So what's gone wrong? U.S. banks have $2.3 trillion available to lend, up nearly $96 billion in just the past month. Prior to the financial crisis, these deposits typically ran at less than $2 billion. But instead of earning 4.5 percent on new car loans, or 10 percent on personal loans, banks are just depositing all this liquidity back into Fed coffers and earning a mere 0.25 percent. Apparently, banks prefer that meager but guaranteed return to the risk of consumer lending, which seems dicey because Washington just can't get its fiscal act together.
"What we have here is a case where the transmission channel between the monetary policy and the real economy is clogged up ... The obvious question is: what is the Fed doing to repair, and restore, this dysfunctional process of financial intermediation? They may be doing something, but I don't see anything."—Michael Ivanovitch president of MSI Global