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How the Fed Cut Affects the Prime Rate

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October 8, 2008 RSS Feed Print
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The Federal Reserve's key rate cut today aims to steady the markets and stem the financial crisis. But it also changes the rate consumers are charged for loans.

For consumers, it's all about the prime lending rate, which is used for everything from car loans to home equity loans. Banks typically take cues from the Fed, which means the prime lending rate often moves in tandem with the fed funds rate.

Case in point: Bank of America, Wachovia, and Wells Fargo all said Wednesday that they're lowering their prime lending rates from 5 to 4.5 percent, which matches the 0.5 percent fed rate cut.

Tags:
loans,
Wall Street,
Wachovia,
Bank of America,
Federal Reserve,
banking,
interest rates,
Wells Fargo

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I think we have a lot of regulations and guidance but no one every cared!!

All the rules in the world cannot keep the fox out of the henhouse. This is simply a problem that the 'fox' (ie all the greedy people on wall street) did everything in their power to make money even if it meant pushing teaser loans to the unwary.

More rules will not matter if there is no stiff penalty to enforce them; the people want a regulator and more rules but we shall see if anyone cares in the end....

lee of CA 1:32AM October 10, 2008

thank you small business owner, you said it right.

pedro of FL 7:40PM October 08, 2008

What the hell are you Smoking? Gee, will a 2000 sq foot home with an Ocean View be priced the same as a 3000 sq foot home with a Wal-Mart view? Let's see, 2.5 bath, sorry, the regulators say you can't raise your asking price to exceed the price for a 1.5 bath.

OF course, we will reduce un-employment once we add 20,000 new Regulators to monitor house prices. Oh wait, California is already in debt $7,000,000,000 so we can't afford to hire anyone.

You must be drinking some of the Peace and Freedom party Kool-Aid with some of the Pelosi sweetener added.

Suggestions a might make sense -- too a point. Gee -- you want to subsidize the lower rate? Isn't that how we got into this mess in the first place, subsidizing mortgages for people who had NO business getting into a mortgage (and don't give me the "predatory" lenders spiel -- if you aren't smart enough to understand the down side of a mortgage you shounldn't be buying a home.)

Suggestion d -- Clearly there are abuses. But, don't stop with CEO's. There are plenty of other occupations who financially rape us. (Trial Lawyers, Union Presidents, Teachers Union, and Politicians to name a few)

p.s.... I am a small business owner.

GH of CA 4:56PM October 08, 2008

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