Featured Stories World News Commentary Money Watch Multimedia Prison Planet U.S. News Science And Technology

Banks’ ‘Catatonic Fear’ Means Consumers Don’t Get TARP Relief

  • Print The Alex Jones Channel Alex Jones Show podcast Prison Planet TV Infowars.com Twitter Alex Jones' Facebook Infowars store

James Sterngold
Bloomberg
Monday, Jan 5, 2008

As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn’t succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won’t lend to them.

While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program on Oct. 3, most bank lending to consumers remains tight and interest rates high. The average credit-card rate was 14.33 percent on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41 percent in October 2007.

That’s prompted criticism from Alan S. Blinder, a professor of economics at Princeton University in New Jersey and a former Federal Reserve vice chairman, who says the government should take a more active role as a stakeholder in the nation’s banks.

(ARTICLE CONTINUES BELOW)

Banks’ ‘Catatonic Fear’ Means Consumers Don’t Get TARP Relief  121208banner3

“With the banks in a state of catatonic fear now, they’re just sitting on the capital,” Blinder said in an interview. “I don’t fault the banks one bit, since this shows Wall Street they’re safer, but then this doesn’t get you much improvement. If you’re taking money from the public purse, we should get something in return, and we’re really not.”

Jeffrey Garten, a professor of international trade and finance at the Yale School of Management in New Haven, Connecticut, and a Commerce Department undersecretary during the Clinton administration, says banks should be forced to increase their lending or risk having taxpayer money taken away.

  • A d v e r t i s e m e n t

“The government isn’t acting aggressively enough to demand a quid pro quo,” Garten said. “The public good is the key to the private good in this case. It’s not the other way around.”

$8.5 Trillion

Although the government has committed more than $8.5 trillion to energizing the economy, and the Fed cut a key lending rate almost to zero, banks haven’t made it easier to borrow. The Fed said consumer credit fell by $6.4 billion in August, the largest drop in 65 years, and then by $3.5 billion in October, the first time since 1992 that there were two months of declines in a year.

In its most recent quarterly Senior Loan Officer Opinion Survey in October, the Fed reported that about 85 percent of U.S. banks said they had tightened standards on commercial and industrial loans to companies with more than $50 million in annual sales, up from 60 percent in July. Ninety-five percent said they increased the cost of those loans. About 70 percent said they made it more difficult to obtain prime mortgages, and almost 65 percent said they did the same for consumer loans.

Full article here

This article was posted: Monday, January 5, 2009 at 10:57 am





Infowars.com Videos:

Comment on this article

Comments are closed.

Watch the News

FEATURED VIDEOS
Doctors: Ebola Mutation Presents Nightmare Scenario See the rest on the Alex Jones YouTube channel.

Another Way Background Checks Infringe 2nd Amendment See the rest on the Alex Jones YouTube channel.

© 2013 PrisonPlanet.com is a Free Speech Systems, LLC company. All rights reserved. Digital Millennium Copyright Act Notice.