America's largest bank JPMorgan Chase shifted nearly $350 billion from its Federal Reserve account into U.S. Treasuries since 2023.
The move demonstrates how traditional financial giants are repositioning balance sheets as the Fed cuts rates.
The bank's Fed deposits dropped from $409 billion at year-end 2023 to $63 billion by Q3 2025.
Treasury holdings surged from $231 billion to $450 billion.
What Happened
JPMorgan executed the transfer as the Federal Reserve cut rates to the lowest level in three years this month.
The Fed raised rates from near zero to above 5% between 2022 and early 2023, then began cutting in late 2024.
Bill Moreland, founder of BankRegData, stated JPMorgan is "migrating money at the Fed to Treasuries" as "rates are going down and they're front-running."
The bank avoided large bond positions when rates were low in 2020-2021, dodging losses that hit Bank of America when rates rose in 2022.
JPMorgan's withdrawals offset cash movements from more than 4,000 other U.S. banks combined.
Total bank deposits at the Fed fell from $1.9 trillion to $1.6 trillion since year-end 2023.
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Why It Matters
The maneuver allowed JPMorgan to lock in higher yields before rate declines erode returns.
Banks earn interest on Federal Reserve deposits, a mechanism implemented in 2008 to manage liquidity.
Those payments reached $186.5 billion in 2024.
The Senate rejected a bill in October that would have banned these interest payments.
Senator Rand Paul argued the Fed was paying "hundreds of billions of dollars to banks to keep money idle."
Republicans Ted Cruz and Rick Scott backed his position.
Paul's data showed the 20 largest banks earned $305 billion in reserve interest since 2013.
JPMorgan received $15 billion in 2024 while reporting $58.5 billion total profit.
The repositioning reflects institutional strategies as monetary policy shifts from tightening to easing.
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