Monday, July 27, 2009

Banks Still Not Lending


The Wall Street Journal writes today:

Lending continues to slow as bankers and borrowers refrain from taking risks, in a bearish sign for the economy.

The total amount of loans held by 15 large U.S. banks shrank by 2.8% in the second quarter, and more than half of the loan volume in April and May came from refinancing mortgages and renewing credit to businesses, not new loans, an analysis by The Wall Street Journal shows.

The numbers underscore two related trends weighing on the economy. Financial institutions are clamping down on lending to conserve capital as a cushion against mounting loan losses. And loan demand is [decreasing, as consumers hunker down to conserve resources].

While some may be surprised by this, I have repeatedly written that - no matter how much money the government throws at them - the banks will keep hoarding cash until the economy stabilizes. Or as a senior official at a big bank put it with slight exaggeration

No one is going to lend a nickel until the economy turns.


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1 comment:

  1. AnonymousSeptember 27, 2009 at 10:05 PM

    I wish all these greedy banks would fail. All they have done is taken money from the poor and do not consider how Americans are struggling just to keep their family food on the table. God will judge all of you greedy banks and people robbing the poor of their hard earned money charging 20-30% interest rates.

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