Banks: Start Lending Because the White House Said So!
Yesterday, I asked the question, “When will banks start lending?” Today, the White House issued it’s desired answer: NOW!
White House press secretary Dana Perino had this to say: “What 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.”
“The way that banks make money is by lending money. And so, they have every incentive to move forward and start using this money.”
Officials intentionally created the capital infusion program with a limited amount of red-tape so as not to discourage banks from participating. While this may encourage participation it does not prevent banks from sitting on the cash or using it to fund anything other than loans.
TARP will begin investing in banks this week and yesterday the Fed began purchasing commercial paper. Liquidity in the commercial paper market is extremely important since CP provides many businesses with the short-term financing they need to cover day-to-day expenses.
So, this week may see some increased lending action after all, but it probably won’t have much to do with orders from the White House.
Tags: bailout, dana perino, liquidity, TARP, white houseRelated Stories
POSTED IN: Acquisitions, Corporate, Economy, Federal Reserve, Investment, Market, News, Uncategorized
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