This gives the Fed enormous "assets" that can be "lent" or "deposited" in US banks to shore up their reserves if they lose money.
JP Morgan's Balance sheet in December, 2011 showed assets of $145 billion cash, $696 billion loans and $1.43 trillion of trading assets (stocks, bonds, etc.). In brief, it's principal market activity is now trading, not banking.
If JP Morgan or any other large bank loses too much money, the Fed "deposits" money leveraged off its T-Bill "assets": remember the Federal Reserve is itself a bank that can treat it's T-Bill holdings as assets to be lent or deposited in other banks. The Fed holds almost $2.4 trillion in T-Bills, applying the 10% reserve requirement to itself, the Fed can loan out over $18 trillion dollars.
If JP Morgan loses big in the casino, err, I mean stock market, the Fed steps in and deposits money borrowed in our name to make up the losses.
You and I are on the hook for the enormous debt taken on by the Fed, but all of the profits go to the bank's shareholders and management.
Like I said, having your losses backed by a third party while getting to keep all of the profits is a nice business if you can get it.
The Fed doesn't deposit money in other banks.
If JP Morgan loses big in the casino, err, I mean stock market, the Fed steps in and deposits money borrowed in our name to make up the losses.
Why would the Fed have to borrow money? Why would it be in our name?
You and I are on the hook for the enormous debt taken on by the Fed
What debt is taken on by the Fed? How are we on the hook for it?
but all of the profits go to the bank's shareholders and management.
Bank expenses last year were about $4 billion. Shareholder dividends were $1.6 billion. Where did the rest of their almost $80 billion in net profits go?
Like I said, having your losses backed by a third party
Not sure what you mean here. Banks lost tens of billions during the crisis. The Fed didn't hand them money to zero out those losses.