The Obama administration is attempting to get banks solvent, so they can make loans to the consumer and industry. However, banks appear to continue to hold back.
In its widely publicized effort to “clean up the books” of so-called “toxic waste,” the government has made bank executives gun shy. A hesitant bank executive does not tend to make loans. He or she would rather play it safe.
The government helps this timidity along by making the spread of government investments (cost of borrowing from the government and return from investing in government bonds) a sure thing. So why should bankers make risky loans?
Yet loans to consumers and business are the recipe, the stimulus, the means, of getting us out of the deep recession.
Not government handouts.
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