It used to be that smaller banks would take their excess reserves that they did not have clients to loan to and would pass it on to larger commercial banks. Today, he said that this money is largely going to the Federal reserve.
Excess reserves held by the Fed have gone from zero in mid 2008 to approximately $2.4T today. Excess reserves used to be tracked until mid 2013 in a nice simple graph by the Fed but that was discontinued when they hit about $1.8T.
Now they only maintain total reserves, which has a very similar shape but is about $70B too high as it includes legally mandated reserves.
Clearly something drastic has happened to US banking and a lot of money that used to be elsewhere is now flowing to the FED. So where was all that money before 2008 when the Federal Reserve started offering interest for excess deposits? What businesses aren't being funded, mortgages not being granted, entrepreneurs left high and dry without startup money? It is like an entire sub sector of the banking industry has become nationalized and nobody noticed.