One Way the Fed's Ploy Could Backfire on Banks

The Federal Reserve's low interest rate policy is designed to encourage businesses and consumers to spend and borrow -- and based on banks' growing loan books, it may be working. However, should investors be wary of a potential situation in which banks, driven by the desire for higher-yielding assets, start making loans that may not be paid back?

Fool.com financial analyst Matt Koppenheffer explains what jumped out at him while reviewing fourth-quarter reports across the banking sector, ranging from the biggest -- like Bank of America -- to well-known regionals such as US Bancorp . For all the details, be sure to check out the video below.

Furthermore, with big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new norm or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether US Bancorp is a buy today, you're invited to check out our premium research report on the company today. Click here now for instant access!

The article One Way the Fed's Ploy Could Backfire on Banks originally appeared on Fool.com.

Matt Koppenheffer owns shares of Bank of America. The Motley Fool owns shares of Bank of America and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.