Tuesday, October 14

Bloomberg Article on Paulson's Banking Capital Cram Misses the Point

This article on Bloomberg article argues that Paulson's capital cram may not work because the treasury doesn't have the capability to force banks to lend. Why am I the only person here who thinks this is missing the much larger and much more important point: The banks need sound businesses they can lend to! Most of the problem of the financial crisis has to do with the fact that lending standards were too loose; which is another way of saying they were lending to people that shouldn't have gotten credit in the first place. So adding more credit to the system fixes this problem how exactly?

No comments: