Dean Baker at the American Prospect notes a little-reported fact in the wake of the half-point Fed interest rate cut a few days ago: the long-term rates at most banks actually went up.

That’s not how most of us think things are supposed to go.  And indeed, it isn’t how the system generally works.  But with banks losing so much money on foreclosures they invented with their own greed, they’ve taken the opportunity to bail themselves out at Ben Bernanke’s largess:

Beat the Press Archive | The American Prospect

There is another story in which the answer is less ambiguous. Banks borrow short-term and lend long-term. If they can borrow at a lower cost and lend at the same or higher interest rates, then they are unambiguous winners. For them, a rate cut that increases the spread between long-term rates and short-term rates is clearly good news.