With the Fed having released the minutes from its Federal Open Market Committee earlier this week, investors heard the news that the third round of quantitative easing, QE3, may end earlier than expected. Several banks fell on the news, because of investor fears that interest rates would rise as a result. In this video, Motley Fool financial analysts Matt Koppenheffer and David Hanson discuss the idea of how banks "borrow short and lend long," and why rising interest rates could hurt banks on the "short" financing end long before they help on the "long" lending end. Matt and David then highlight four big banks with a low loan to deposit ratio that will be ready to deploy a lot of new loans quickly under new interest rates, and cash in on the rise.
David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Bank of America. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.