The banks aren’t lending. And despite what you have heard, they probably won’t start just yet….
Sure, there are some positive signs that the credit market is opening up a bit: Libor rates, the price at which banks lend to each other, have crept down in recent days, greasing the wheels of capitalism, or at least what’s left of it. Some banks, like JPMorgan Chase and Citigroup, actually made loans to banks in Europe on Friday. These are all important steps on the way to a recovery.
But make no mistake, the banks are doing the opposite of what Henry M. Paulson Jr., the Treasury secretary, sought when he virtually demanded that they accept the taxpayers’ money: They are hoarding it. It’s a bit like the government’s sending out tax rebate checks and the consumers’ not immediately running out and spending them.
Is this that redistribution of wealth O’Reilly talks about?
That’s just not true in California. If you have good credit, you can get a loan for just about anything. AND, many people here are taking equity out of their homes to purchase a 2nd home from the growing list of foreclosures. Bay Area home sales soared last month 45% above the record-low levels of a year ago. Southern California home sales shot up by an unprecedented 65 percent last month from the dismal, record lows 2007.
“The banks aren’t lending.”
4 homes in the $450-800K range have sold in my neighborhood in the last 6 weeks, and an undeveloped piece of land sold for $635K. None of them are primary residences.
Thanks goodness I have Sorkin to set me straight – not!
Things must be tough…I’m down to three credit card offers a week these days.
Sorkin depicts banks as “hoarding” cash. It might be more accurate to say banks are conserving cash until they become more confident that they won’t need it for their own survival. That’s a typical (and understandable) response to a financial crisis.
But look at the bright side. During the Panic of 1907, banks nationwide didn’t just refuse to lend. For six weeks they also refused to allow withdrawals.