The Occasional Observer

The primary purpose of ZIRP was (and is) a backdoor bailout for banks......not to help consumers with lower interest rates as advertised. Anyone still under the illusion that it had to do with encouraging lending might want to find out why the Emergency Economic Stabilization Act of 2008 included a provision for the Fed to pay interest to banks on reserves (which they never did before).

Obviously paying banks NOT to lend money isn't going to encourage lending. It shouldn't come as a surprise that excess reserves shot up after this was enacted...

The Federal Reserve Bank of St. Louis makes it quite clear:

"By keeping short-term interest rates low, the Fed helps recapitalize the banking system by helping to raise the industry’s net interest margin (NIM), which boosts its retained earnings and, thus, its capital."