Because banks aren't just "store houses of money", they play important roles in the flow and quantity of money. (Each time they lend money they create money mon

Because banks aren't just "store houses of money", they play important roles in the flow and quantity of money. (Each time they lend money they create money money out of thin air.) Which means there is risk in being a bank, as you probably remember from when a few banks failed a little while ago. But if the fed was a bank, it would be risk free (how could the fed fail?). Which cause all sorts of trouble. The fed could take actions (loan risky money) without worry. Or they would not be permitted to loan money - but that would cause even bigger problems because it would restrict the money supply. There's no good economic way to do it.