Federal Home Loan Banks are currently offering 3.5% yields on their paper but making no money due to their low-coupon assets and operational costs, and without regulatory intervention to allow them to borrow more from the Fed's home loan advance facility, some will go out of business.

The Federal Reserve is raising capital requirements (via the counter-cyclical buffer and stress test results) on the largest banks, which is reducing their willingness to lend and causing them to shrink their balance sheets, particularly their risk-weighted assets.

If the Federal Reserve system were reformed, it should be reorganized to eliminate the Federal Reserve Board in Washington and turn three of the western Federal Reserve branches into full reserve banks, subject all of them to Senate approval, and convert the Federal Reserve building in Washington into a homeless shelter.

Loan growth appears strong in aggregate data but this is primarily a rotation from non-bank financing sources (mortgage REITs, fintechs) back to banks as the bond market volatility peaked, not true new credit creation.

Quantitative easing made commercial banks bigger by giving them short-term reserves at the Federal Reserve, but it did not increase their earnings because banks could not profitably deploy those reserves into long-duration lending like mortgages or commercial loans at the rates available.

QE pushed interest rates down dramatically, which disincentivized credit creation by commercial banks in a paradoxical way, causing that credit creation to shift into the non-bank fintech sector, which subsequently collapsed, creating economic instability.

Current members of Congress lack the financial expertise and institutional knowledge to effectively question Federal Reserve policy, unlike Congress members from a century ago or past Fed chairs like Paul Volcker and Alan Greenspan who could credibly challenge fiscal policy through technical expertise.

The Federal Reserve historically tracked down and helped the Roosevelt administration force Americans to surrender physical gold in the early 1930s, demonstrating an authoritarian aspect to the Fed that is inherent to the institution.

The U.S. bond market is a critical structural advantage for the United States, and if the Federal Reserve interferes with it through QE and monetary experimentation, the country will lose the ability to bounce back quickly from crises like COVID or recessions.

The concept of a 'neutral rate' used by the Federal Reserve to justify policy is a made-up economic concept that the Fed is unsure about, and policymakers should use real-world inflationary/deflationary terminology instead of invented economic concepts.

The Fed should implement a licensing system for Federal Reserve officials requiring them to make and publish regular predictions about economic outcomes, with scores tracking their forecasting accuracy to create accountability.

Charles Schwab is now the seventh largest bank in the United States with three times the core deposits of Goldman Sachs, making it a larger bank than most traditional banking competitors.

The primary beneficiary of quantitative easing was the U.S. Treasury, because the Fed monetized the cost of Treasury issuance by purchasing Treasury bonds and passing the income from the Fed's 2.7 trillion dollar mortgage securities portfolio to the Treasury, effectively subsidizing government spending.

If the Federal Reserve issues a Central Bank Digital Currency (CBDC), it will have the ability to track and monitor all transactions and control access to accounts, potentially denying individuals access to their money if the Fed disapproves of their activities.

Homebuyers and real estate agents are rediscovering the concept of mortgage assumability, which allows new buyers to assume existing mortgages at original low rates, making refinancing unnecessary and preventing prepayment of low-coupon mortgage-backed securities.

The Federal Reserve's stress test for large banks modeled a 40% real estate decline and higher high-yield spreads, but these surrogates are outsized because today's mortgage market is 99% government-guaranteed, making private label losses negligible compared to the 2008-2012 period.

The Federal Reserve should avoid selling mortgage-backed securities during quantitative tightening because the market has limited appetite and selling would cause significant price declines, but could opportunistically dribble out small amounts (10 billion per month) if rates fall.

Federal Reserve officials do not know how much balance sheet reduction (quantitative tightening) corresponds to how much change in the federal funds rate, revealing a fundamental gap in their understanding of their own policy transmission mechanisms.

Banks are forced to raise capital because regulators look back at 2010-2012 (bad years) when banks took losses not just on private mortgage securities but also huge costs in fines and settlements, so they assume a similar crisis could occur despite changed market structure.

Federal Reserve models that use reserve requirements based on a percentage of GDP are overly simplistic and reflect a lack of understanding of financial complexity, but they are used because they are the only concepts the Fed can explain to the public and Congress.