Would banks be more willing to lend if interest rates went up? (free market, buy)
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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Banks are getting as green as they ever did with current rates (BIG SPREAD). You would think it must be a 'feeding frenzy' for them
BTW, all Banks are not lending. ESPECIALLY new loans. I couldn't get a loan on a commercial income property that was fully leased to long term tenants and had a 10 % Cap Rate; plus I was paying 50% down !!! I have a 780 credit score and plenty of reserve assets. My banks SAY they are still 'over lent' according to new ratio requirements. (These are banks I have used for 30 yrs). Hang on, something is fishy (Banks know we are not out of the woods yet).
this is a two sided coin. Would consumers/small biz be willing to borrow at higher rates? some would, my guess is that a lot more wouldn't. Banks aren't in this for kicks. why lend money when consumer spending is down tremendously and small businesses are folding left and right. Ok, So we give existing small businesses more cash. for what? to stockpile more inventory? Nobody is buying anything!!! banks are just sitting on a bunch of cash and i don't blame them, banks will find the way to make the most profit with the least amount of risk.
Interest rates, in a nut shell, mean a higher price and a lower supply of money to hand out. A leftward shift in supply curves means higher price and less quantity demanded. That is the simplest answer without taking into account other factors of banking decisions.
I personally strongly disagree that the "community bankers did not create this mess" as I know first hand that MANY small and midsized banks did in fact fully contribute to the disastrous lending policies that were advanced by morons like Sen Dodd and Rep Frank -- the crap loans that these idiots encouraged small lenders to make and then sell to Fannie & Freddie directly led to MBS implosion. Further the overall mindless "real estate is always a safe bet" fallacy that such behavior encouraged led to MANY of these small banks getting into way way too risky deals with developers of commercial projects that could not be resold on the secondary market and in fact directly caused the FDIC to step in and shut down the many banks that they have had to.
The notion that small bankers are always cut out of the do-gooder George Bailey mold is a load of BS -- many, perhaps most of these people are much more like the insider dealing, law bending yahoos that make life miserable for many. It is no surprise that the White House would want to curry favor with this people as their lobbying dollars can be easily directed at efforts to put more scrutiny toward the national mega banks OR to support the "fake populist" efforts that were mentioned above in the thread...
I don't know about the fair and square part, but as to paid off, bought off is more appropriate.
Too big to fail is a fundamental flaw in our economic construct, and it highlights the realities of capital resource monopoly systems, such as ours. Those who cheer them on are either part of the plantation head or uncle toms too optimism-biased to realize not everybody [i.e. you] can live in the penthouse, and cheering for your favorite NFL team will not make you nor get you paid like part of the team.
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