B of A Makes Profits Off Fed & Depositors Get Shortchanged

Households are earning so little from their bank accounts that Bank of America, the largest U.S. lender, has pocketed about twice as much cash this year parking money at the Federal Reserve than it has paid to savings-account holders.
The North Carolina-based bank paid U.S. depositors a 0.43 percent interest rate last quarter, according to earnings documents the company released last week. Savings-account holders took home even less, with total interest on their accounts reaching just $32 million for the three-month period ending in March.
Meanwhile, Bank of America raked in $63 million simply by stashing cash at the Fed. The nation's central bank only recently began compensating commercial banks for storing their money at the Fed as part of its response to the financial crisis.
Thanks to Fed policy and banking industry consolidation, the largest banks are booking easy profits as households and businesses plow record amounts of cash to lenders despite a record-low rate of return. Rather than lending that cheap money out to consumers or small businesses, banks are either investing it or hoarding it at other institutions, where they earn a much higher rate than what they pay their own customers.
Bank of America's $1 trillion in deposits worldwide cost the firm just 0.33 percent last quarter, down from 0.46 last year, including non-interest bearing accounts. Americans stored about $713 billion at JPMorgan Chase as of March 31, but the second-largest U.S. bank only paid a 0.53 percent rate on interest-bearing deposits, a figure that shrinks to about 0.3 percent when all deposits are considered. Citigroup, the third-largest bank, continued to reduce the rate it paid its depositors even though the yield it earned from its own deposits continue to rise, while Wells Fargo, ranked fourth in total assets, lowered the amount it paid depositors to just $615 million, a figure eclipsed by the $1 billion in service fees it charged those very same customers.
All the while, deposits at these four firms continue to increase as consumers "hoard powder for a rainy day," said Greg McBride, senior financial analyst at Bankrate.com. Analysts at Barclays Capital call it "lazy" money, according to an April 8 research note for clients.
Charles H. Noski, chief financial officer at Bank of America, told analysts last week that the lender's commercial customers "continued to prefer to hold rather than invest cash."

Will we ever learn?  How is this possible, after everything we have been through with the banks and financial institutions? 

This is what our government does.  Our lawmakers talk big during the heat of battle.  They tell us that they will regulate this industry and they will protect the consumer and the only thing we have to do is bail the financial institutions out.  Banks can be cavalier with their deceptive loans, and practices.  They can cause the biggest real estate disaster of all time, and bring the country to its knees and look.  They put their money into the Federal Reserve and earn mega-interest while they pay a mere penitence in interest to their customers.  Who do you think is paying that interest to them?  We are through our tax dollars.  Our politicians are not protecting us.  They are without a doubt making it possible for the banks in this country to commit regular acts of financial rape.  How gullible are we?