The Federal Reserve is paying 5% interest on $7 trillion of reserves held by banks. Since this is in excess of what the Federal Reserve is earning on the assets on its balance sheet they are booking the difference as “deffered assets”. Little of this needs to trickle down to retail depositors given the Federal Reserves “ample reserves” policy so this is effectively a bank subsidy.

For all the talk of the Fed “printing money” this is literally printing money because there is no offsetting asset on the Feds balance sheet. Eventually the hole in the balance sheet is supposed to be closed by interest earned that would normally be paid to the US Treasury.

In other words the Federal Reserve has figured out how to directly bail out banks without the consent of Congress to the tune of $10B+ per month. The higher they raise interest rates, the bigger the subsidy. That should leave a lot of banks well capitalized to pick up assets of small regional banks and REITs that will eventually fail. Roughly $10B in bank subsidies can translate into $100B in loans with required 8% capital ratios.

The Federal Reserve considers their “ample reserve” policy a “public good” as in it is good for the public to see savings eaten away by inflation and higher public debt burden of interest payments to subsidize banks.