Growth strategies

Fed Funds At 0%? Rates Can Still Fall

Published July 20, 2012, 5:58 p.m. EDT

|

Updated August 26, 2020, 10:46 p.m. EDT

1 Min Read

There was a time when a 5.375%, 30-year, fixed-rate mortgage seemed outrageously low. Then it was 4.25%. Now it is 3.5%. Lesson number one: just because Fed Funds is at zero it doesn't mean rates can't fall further. In its FOMC statements the Fed has consistently stated that they will not raise the Fed Funds rate until late 2014 at the earliest.

Processing Content

Lesson number two: the folks at the Fed are a lot smarter than I am. Maybe 3.5%, fixed-rate mortgages aren't so bad. Be very, very good at asset-liability management and become very, very efficient in your operations. Because the Fed is smarter than I am and a 3.5% fixed mortgage may look really good for a long time into the future.

Evan Clark, President/CEO
Department of Commerce FCU
Washington, DC

For reprint and licensing requests for this article, click here.

Growth strategies

MORE FROM AMERICAN BANKER

Consumer lending

Fifth Third official: AI will help banks 'out-code' vendors

Jay Plum, head of consumer lending at Fifth Third Bank, says artificial intelligence is fundamentally shifting relationships between banks and their third-party software vendors, allowing banks to do things on their own that they would previously rely on vendors to do for them, like identify risky loans and prepare for exams.

By Kate Berry
Reporter

5h ago
Politics

White House says stablecoin yield won't hurt bank deposits

A new analysis from the White House's Council of Economic Advisers says the banking industry's fears about deposit flight are overstated. Experts familiar with the banking industry's concerns say the report's conclusions are beside the point.

By Claire Williams
Reporter

April 8
Agentic Commerce

Visa expands agentic commerce; Revolut battles Italian regulators

The card brand introduced tech for businesses to tap agentic AI, while Revolut counters Italy's accusations of inaccurate marketing. That and more in the American Banker global payments and fintech roundup.

By John Adams and Joey Pizzolato

April 8
Treasury Department

Treasury proposes AML rules for stablecoin issuers

The Treasury Department Wednesday proposed a set of rules that would require stablecoin issuers to abide by risk-based anti-money-laundering programs similar to those that banks must employ, as well as secondary market monitoring and independent testing by issuers.

By Ebrima Santos Sanneh
Reporter

April 8
M&A

Capital One pushes deeper into AI, business payments

Closing its Brex acquisition adds a corporate-focused fintech and new agentic commerce tools to an already considerable consumer payments division.

By John Adams
Executive Editor, Payments

April 8
Artificial intelligence

Exclusive research Big AI spenders are reaping large productivity gains

American Banker data found that those who upped artificial intelligence spending by more than 25% in the last year saw major improvements in employee output.

By Frank Gargano
Data Reporter

April 8

Load More