Congress Hammers Yellen on Paying Subsidy To Banks

``Federal Reserve Chair Janet Yellen ran into a bipartisan buzzsaw today over why the Federal Reserve is paying interest to banks on the trillions of dollars in reserves that they hold at the Fed... Why doesn't the Fed just go back to the old way of doing things? Because it can't do so without getting rid of all those excess reserves that render ordinary monetary policy ineffective. The only way to go back to the old way would be to sell trillions of dollars in securities back to the market. As Yellen told the House committee, attempting such a massive sale right now "would be very disruptive to the economy." ''