excess reserves

The Federal Reserve's Exit Plan is Another Bank Bail Out Pig Fest

The Federal Reserve is announcing an exit strategy for credit tightening, according to the Wall Street Journal.

The centerpiece will be a new tool Congress gave the central bank in October 2008: an interest rate the Fed pays banks on money they leave on reserve at the central bank. Known as "interest on excess reserves," this rate is now 0.25%.

So, the Fed pays banks interest on money lent to the Fed from the banks.