“then they can loan out ten times that in loans (I don’t know what the ratio is) and make 6% on that so they would get 60c a year off each dollar I have deposited or something like that, or are my aassumptions way off?”

That sounds suspiciously like Hedge Fund SOP with CDOs doesn’t it? Wonder how that model works out in the long run…maybe ask someone at Bear Stearns 😉