In the following video, Motley Fool financial analyst Matt Koppenheffer looks at the misconception that, at the current extremely low interest rates coming from the Federal Reserve at the moment, banks are borrowing at nearly zero, lending with interest, and pocketing the difference hand over fist. In reality, there are ways that low interest rates do generate capital for the banks, but the margins on that lending spread aren't nearly as appealing as many people think they are.
Matt Koppenheffer owns shares of Bank of America. The Motley Fool recommends Wells Fargo and 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 don't 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.