Thursday, January 28, 2010

Why aren't banks lending?

This is a genuine forehead slapper.

Banks aren't lending because they need to keep the cash on their balance sheets so they can be picked by the FDIC to take over some nearby failed institution.

Duh!  Now, what to do about it?

That is a perverse logical loophole that will take some creative thought to untangle.  I'll be working on it.  If you want to get the economy unstuck, then you should work on it too.

See this Reutter's article.  Hat tip to Tyler at Marginal Revolution.

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