Posted on 02/22/2010 2:20:40 PM PST by blam
CHART OF THE DAY: Banks Continue To Pull The Rug Out From Under The Economy
Joe Weisenthal and Kamelia Angelova
Feb. 22, 2010, 3:21 PM
Can the economy revive if banks don't start to lend again?
Let's hope so.
Today the St. Louis Fed released its latest monthly look at commercial and industrial loans at major banks -- a measure that some would say represents the essence of the US banking system.
As you can see, this measure is still falling like a knife -- a bad sign for the ongoing health of the economy. (And also not what we were promised when we bailed out the banks.)
(Excerpt) Read more at businessinsider.com ...
I don’t understand why they bash banks, they are just responding to the conditions created by government policies.
So what happened in 1970 that started the see-saw effect?
And why would they start lending, when they saw from what happened to the GM bond holders how little their agreements meant to this administration?
interesting how flat it used to be until 1970.
Nixon closed the gold window in 1971
The drop may be more due to lack of demand than lack of supply.
We starting shipping our manufacturing overseas.
“interesting how flat it used to be until 1970.”
Why would that be?
That’s weird. I always thought this happened during the Great Depression.
So was it brought back, then removed again?
This could lead to the government taking control of the banks while denying that it is taking control of the banks.
What BS.....the banks would lend, but the FDIC is coming in the back door and hammering their current loan portfolio.
Because we were told we HAD to bail out the banks or else ‘credit would dry up and the country would financially collapse’. So we bailed them out and the reason they gave for HAVING TO INJECT BAILOUT RIGHT THIS MINUTE!!!! is happening anyway.
Off topic but did you see this?
http://www.blogster.com/joannemor/somethings-up-in-the-gold-market-imf-the-treasury
That execess reserves held at the fed graphic is interesting.
Borrowing money that you can’t pay back is NOT good for the economy.
credit for those who can’t pay it back SHOULD dry up. Propping up the deadbeats is what got them into trouble.
This is the over reaction to easy credit.
On the one hand legitimate borrowers are not getting credit and yet fannie and freddie are still loaning dollars to deadbeats.
This is commercial, not the Freddie/Fannie stuff you are talking about. Notice the chart that at the top says “Commercial and Industrial Loans...”
Excess Reserves and the Inflation Threat
Banks are required to keep a certain amount of reserves at the Fed based on the amount of the banks' deposits. In 2007, for example, banks' required reserves against deposits averaged about $41 billion. Traditionally, banks would keep a modest amount of additional, or "excess," reserves on deposit at the Fed to avoid penalties that arise if their total deposits fall below the required level. In 2007, excess reserves averaged about $1.8 billion.
In the face of the crisis, all manner of financial institutions sought to maximize cash on hand. However, by hoarding cash balances, financial institutions exacerbated the credit crunch enveloping the financial system. The Fed sought to increase liquidity sufficiently so that institutions could obtain the necessary cash balances and, perhaps equally important, be confident that they could obtain more if necessary. It was hoped that institutions might then feel confident enough to participate more normally in financial markets by lending to one another. One manifestation of the Fed's efforts was the explosion of banks' excess reserves...
...The expansion in excess reserves demonstrates the lengths to which the Fed has gone to sustain financial markets. It also demonstrates the extraordinary latent pressures that could trigger resurgent inflation.
Going off the gold standard and then borrowing borrowing borrowing, which led to inflation.
It’s just around the corner.
We could double sales this year if banks understood the individual business customer and their consistent growth rate as well as the uniqueness of their business.
I understand tightening credit for saturated business models that have a track record which follows national trends.
But there are many businesses like mine that are unique start ups with steady growth every single year. Even this year when all of my friends in various $$$ enterprises measured success by who declined the least, we grew and are on track to grow again.
Banks need to hire people trained to work outside the box and understand the the little guy. The free market and a user friendly credit sytem is part of what made American great. Way back when, a dummy like me could go to my neighbor banker with an idea and he would say “why not that makes sense”. Now we are all measured by a data stream that has nothing to do with the individuality of the business.
The conditions in this country, high tax, heavy regulations and uncertainty about things like Cap N Tax and Card Check has a big influence. Uncertainty is bad for business.
I also think they have been pressured to buy treasury bonds
No, thanks.
The banks were PAID to reduce principle and interest.
The banks ARE paid for each year a modified loan remains modified.
Obama and wall street are tossing main street under the bus.
FWIW, somebody posted it on Friday http://www.freerepublic.com/focus/f-bloggers/2455642/posts
Jimmy carter happened in the 70’s...
Nixon took us off the gold standard so our money was no longer backed by the gold at Fort Knox. We went to staight FIAT money and have suffered the same exact identical fate of every other nation that has ever tried to go to straight fiat money, backed by nothing buy the good faith and sound judgment of the criminals, liars, psychopaths and other assorted snake oil salesman at the top saying “trust me”.
History always repeats itself.
Human nature never changes.
Fiat money always collapses.
No, From ‘33 to ‘71 it was illegal to own gold with but few exceptions such as jewelry and dentistry and a few collector’s items.
My former bank employer was forced by FDIC to re-appraise all the commercial real estate and chargeoff everything above liquidation value - on PERFORMING loans.
Created an insurmountable capital deficit and FDIC closed it last month.
1.3 billion community bank, 120 million in liquidity on the seizure date. Delinquency rate on commercial loans @ .35%, no subprime assets, net income of $30 million in 2009.
It was a crime and a taking.
Since I posted last:I read something about where the Gold Standard was removed in 1933 then brought back in 1946 then dropped in 1971.
You may be thinking of the standardization of the dollar as 1/35th. of an oz. of gold. This was for gov. and central banks not private ownership. Not til ‘71 did it become legal for a person to obtain gold other than collector coins.
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