Bank Lending – At Risk if They Do, More Risk if They Don’t
filed in Daily Buzz News on Dec.16, 2009
Zachary Scheidt submits:
It’s not easy being a bank these days. Oh sure, it’s nice to still be alive. After all, last year at this time it was uncertain exactly how many financial institutions were actually going to stay in business. But after begging for taxpayer money to keep them alive and kicking, banks are now finding that the strings attached are more like giant anchor chains and regardless of whether an individual firm has paid back the funds or not (and really it doesn’t matter whether the institution received any funds or not), banks are now being held to a standard that requires them to focus on the public good more than the pursuit of profits.
This week, Barack Obama delivered a very pointed address to US banks, declaring that he didn’t run for office to help a bunch of “fat cats” get rich. With many high profile banks repaying TARP liabilities and removing themselves from the compensation restrictions imposed by the government, Obama is sending the message loud and clear that banks are still required to be good stewards of their capital. This implies that the president believes that US banks should significantly increase lending in order to supply liquidity to businesses and consumers in need of financing.