Floyd Norris: Should We Force Banks to Lend?

Why save banks if they will not lend?

That has become a significant political issue on both sides of the Atlantic as governments confront the reality that preventing the financial system from collapsing is not the same as repairing it.

In Britain, that led the government of Prime Minister Gordon Brown to announce a new round of bailouts, with a twist. “In return to access to any government support, there will have to be an increase in lending, and that will be legally binding,” Mr. Brown told a news conference today.

In the United States, aides to President-elect Barack Obama sounded a similar theme. “The focus isn’t going to be on the needs of banks,” Mr. Obama’s chief economic adviser, Lawrence H. Summers, said. “It’s going to be on the needs of the economy for credit.”

Read it all.

print

Posted in * Economics, Politics, Credit Markets, Economy, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The September 2008 Proposed Henry Paulson 700 Billion Bailout Package

One comment on “Floyd Norris: Should We Force Banks to Lend?

  1. Byzantine says:

    [i]Why save banks if they will not lend?[/i]

    Why bother with the banks? Just give the money directly to consumers rather than having government enrich the corrupt, incompetent plutocracy at the expense of everyone else. Oh, pardon me, that’s what they actually intend.