Many of the big US banks will report earnings this week and profits will be staggering. Politicians will be outraged, no doubt, (aren’t they always?), but the Fed has laid the groundwork for banks to earn enormous profits with relatively low risk by engineering a steep yield curve. They pursued this strategy in the early 1990s after the 80s real-estate boom turned to bust and they are using the strategy again to help banks rebuild depleted capital bases.