Why Banks with Capital Are Not Making Loans, and Can Stock Analysts Be Sued for Defamation?
By John Goodman Filed under Uncategorized on September 17, 2010 with 7 comments
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Banks are not making loans for the same reason employers are not hiring: bad federal government policies.
Answer to number two: No. If you are selling stock to the public, you are a “public figure” and should have to prove willful disregard for the truth.
It was pretty outrageous that Bove was sued. He won but it ended up costing him $800,000 in legal fees. Worse was that the CFA did’t pay those fees, it’s in their interest to demonstrate they stand behind the independence of analysts. As for his comment that banks aren’t lending because of regulation, he’s way off. There’s no loan demand.
Government should definitely back off on the banks. Let banks set their own capital requirements. They know best. If they want to return to 40:1 ratios I am sure they must be right.
Steve
The reason banks are not lending is that the interest rates are so low the return on risk is not great enough. So instead they are shopping to consolidate businesses. That is why we are seeing mega mergers these days and no small business or personal loans. We bail them out, then they bailed on us.
I think the demand for loans is actually down more than supply. That’s likely one of the reasons that rates are so low.
A 50% tax rate is very damaging. It is defintely on the other side of the Laffer curve for high income earners.