During the era of high interest rates by the Federal Reserve, the US banking industry received a $1 trillion "windfall"

Last week, the Federal Reserve officially kicked off a rate cut cycle with a 50 basis point cut. As the "high interest rate era" in the United States comes to an end, the media has found that the U.S. banking industry has received a $1 trillion "windfall" over the past two and a half years.

According to an analysis by the Financial Times of data from the Federal Deposit Insurance Corporation, during this high interest rate period, the profits of over 4,000 banks in the United States were boosted. During this period, U.S. banks raised loan rates based on the Federal Reserve's high interest rate policy, but kept deposit rates at a lower level.

Data from U.S. regulatory agencies shows that as of the end of the second quarter, the average annual interest rate paid by U.S. banks to depositors was only 2.2%. This is higher than the 0.2% they paid two years ago, but much lower than the Federal Reserve's overnight rate of 5.5% that banks themselves could obtain.

Although interest rates on some savings accounts have been raised due to the Federal Reserve's target of over 5%, the rates most depositors receive are still relatively low. For example, JPMorgan Chase and Bank of America offer annual deposit rates of 1.5% and 1.7% respectively.

According to the Financial Times' calculations, U.S. banks have generated $1.1 trillion in excess interest income in this way, accounting for about half of the banks' total income during the same period.

Following the rate cut, U.S. banks quickly adjust

After the Federal Reserve cut its benchmark interest rate by 50 basis points last week, banks quickly lowered their rates in response to protect their profits. Reports indicate that Citigroup had prepared to lower rates hours before the Fed's announcement.

JPMorgan Chase will also lower deposit rates by 50 basis points for customers with $10 million or more in cash, aligning future rates with the Federal Reserve's actions.

In response, JPMorgan Chase stated: "Our goal is to ensure fair and competitive rates." Citigroup and Bank of America declined to comment.

Chris McGratty, head of U.S. bank research at KBW, said that after the Federal Reserve's rate cut, banks "definitely" have the "ability to lower deposit rates," but the extent of adjustments may vary among banks.

Some customers start to hold banks accountable for taking advantage

With the arrival of the Federal Reserve's rate cut cycle, the era of high interest rates in the United States is coming to an end. Recently, many bank customers have realized that they were taken advantage of by banks during the high interest rate era. They have begun to file lawsuits against banks for using customers' cash settlement accounts to earn high profits while still providing low rates.

Rieger Financial and JPMorgan Chase have recently faced customer lawsuits, and previously Wells Fargo, Morgan Stanley, and UBS have also faced similar accusations.

According to reports, the core dispute in these lawsuits is that these institutions have used customers' idle funds to earn high profits, but the rates provided by cash settlement accounts remain at levels from the low interest rate era