The Importance of Spreads in the Banking System

The spread is the fact that their cost of financing, when their financing via deposits, is generally a substantially less than the risk free rate. When you impose these sorts of conditions, we're incentivizing that banks just don't make loans, they just earn interest on excess reserves at the Fed. How does that serve public purpose? I agree. You'd rather have, you know, that potential capital being pushed through the machine. But like, that's just a different than operating a bank where your entire livelihood should be capturing a spread and not taking directional risk.