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Bailout Is Bad News for Savers

Banks get trillions, fixed-income investors get screwed: Sloan

By Harry Kimball, Newser Staff

Posted Oct 20, 2009 12:17 PM CDT

(Newser) – Not fed up enough with just putting your taxpayer dollars directly on the line to bail out the nation’s banks? Allan Sloan has latched on to some insidious “collateral damage” from the government’s rescue plan, those trillions spent “to keep interest rates down to support the economy and prop up housing prices.” That’s all well and good, he writes, until you realize that returns on traditional investments for fixed-income folk have taken a nosedive.

“It's a direct wealth transfer from savers and retirees to overly indebted borrowers,” an analyst tells Sloan, writing in the Washington Post. Some bank CDs are off 40% since 2007, while some Treasury investments yield less than 10% of what they did. The Fed has taken taxpayer money to radically remake the financial landscape for the benefit of banks, and to the detriment of those bankrolling the move. “A nice reward from their government for a lifetime of saving,” Sloan writes. “Thanks for nothing, guys.”

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Chart shows home prices, building costs, interest rates and population data since

Chart shows changes in the Fed interest rate. (AP Photo)

A homeowner worried about interest rates. (AP Photo)

Federal Reserve Chairman Ben Bernanke. (AP Photo)

Savers aren't faring well of late. (Shutter Stock)

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Until rates go up, Wall Street will be chowing down on essentially free money, while fixed-income people living off their investments will have to eat into their capital, take more risk or reduce their standard of living. - Allan Sloan

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Bailout Is Bad News for Savers