2 Posts ago I posed the rhetorical question :"What will Washington's reaction be when banks have the ability to lend, but not the desire?"
Its happening, the White House is beginning to demand banks make loans they don't have the stomach for. No real action yet, but this is just a clusterfuck waiting to happen.
Excerpts below:
WASHINGTON (AP) -- An impatient White House served notice Tuesday on banks and other financial companies receiving billions of dollars in federal help to quit hoarding the money and start making more loans.
"We're trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money," White House press secretary Dana Perino said.
Though there are limits on how much Washington can pressure banks, she noted that banks are regulated by the federal government. "They will be watching very closely, and they're working with the banks," she said.
"The way that banks make money is by lending money. And so, they have every incentive to move forward and start using this money," Perino said.
http://biz.yahoo.com/ap/081028/financial_meltdown.html
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