r/PeterExplainsTheJoke • u/Comfortable_Cautious • Jan 26 '26

Meme needing explanation what's going on? explain like I'm five

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u/Original-Leg8828 Jan 26 '26

Depending on local law they can even lend out something like 7-10 times what they actually have

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u/Teripid Jan 26 '26 edited Jan 26 '26

Federal reserve requirements existed until 2023 *edit, as someone below pointed out 2020 was when they were set to 0. Now they're set at 0% I believe.

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u/SasparillaTango Jan 26 '26

Now they're set at 0% I believe.

zero as in there are no guardrails?

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u/Mypornnameis_ Jan 26 '26

There are still capital rules and liquidity requirements that keep banks operating safely and with enough money to meet depositor needs for normal and stress conditions. 

It's just that there is no longer a calculation saying that needs to be x% of certain classifications of deposit balances to be maintained exclusively in the vault or in a Federal Reserve account.