The Federal Reserve building in Washington, D.C.
The Federal Reserve building in Washington, D.C. - 
Listen To The Story


Kai Ryssdal: A good chunk of however much more cash the banks are going to need is going to come from taxpayers. But in a way, though, we're already giving banks a helping hand. They're getting to keep more of the money we invest with them by giving us less back in interest payments. Rates on bank accounts of all kinds have dropped right along with the federal funds rate. That's the rate the Federal Reserve controls.

And today Chairman Bernanke and his colleagues began a two-day meeting to talk about that rate. Chances are they're going to leave it right where it is: one quarter of one percent. Which means the lean times for savers in this economy are going to continue. Ashley Milne-Tyte reports.

ASHLEY MILNE-TYTE: You don't expect to earn a huge amount of interest on a bank savings account. But New York financial adviser Gary Schatsky says these days rates are hitting new lows.

GARY SCHATSKY: In some cases banks are giving as little as .05 percent. That's about as close as you can get to zero without calling it zero.

He says 18 months ago that rate would have been 1.5 or 2 percent. CDs have plunged too. David Certner is legislative policy director with the AARP.

DAVID CERTNER: It's also particularly difficult for people who have maybe suffered stock market losses and are looking for a safe place to put their money. But then when they look at these fixed income investments, they see they're not getting anywhere near the kinds of returns that they want.

Edward Friedman of says times may be tough for savers, but taxpayers of all kinds could have more pressing problems in years to come.

EDWARD FRIEDMAN: I think equally or more important is the fact that, uh, because of all the bailout money the taxpayer will be on the hook over time.

And he says don't forget the lower interest rates help mortgage-holders and those hoping to buy a home, all of which is meant to get the economy back on track. Gary Schatsky says extremely low interest rates should sound alarm bells.

GARY SCHATSKY: When rates go down to close to zero people are all of a sudden ready to go to the edge of their risk tolerance to try to get some number greater than zero.

Which is exactly what happened several years ago when this whole cycle of risk got started.

In New York, I'm Ashley Milne-Tyte for Marketplace.