America’s banks don’t want to lend or nobody wants loans? 28 July 2009 los-bancos-estadounidenses-no-quieren-prestar-o-nadie-quiere-prestamos/8893 source credit is the engine of economies. And in an economy with features of the American economy, it is even more so. It is for this reason that the speed and strength that will be economic recovery in the U.S. will be largely linked to the resilience of the financing. For now, they already begin to perceive the first rays of light, reflecting the recovery of the economy, although these rays are not supplied by the American financial system. An analysis by the Wall Street Journal shows that the value of the credit stock of 15 major U.S. Bank has registered a fall of 2.8% during the second quarter of the year. The importance of this analysis is not less since these 15 entities explains 47% of total deposits at the national level, and they have received US $182.500 million in aid through the voluntary purchase of Capital (Asset Relief Program TARP) program.
When looking for explanations, all appear as valid, given the destructive effect that has had the crisis subprime on across the U.S. economy (although of unequally between different economic sectors and segments of the population). A first investigation seems to shed that bankers and the private sector have reached agreement. The banks don’t want to lend and companies and families do not want to borrow. This match generates a bad deal for both parties and particularly the prospects for economic recovery. Why American banks don’t want to lend? In reality what is happening according to raise David Enrich and Dan Fitzpatrick in the article they wrote for the Wall Street Journal, is that credit is limiting to maintain a level of sufficient capital until you clean up bank balance sheets from losses caused by the crisis. The need of having to load new losses on balance sheets deteriorate the situation of capital of banking institutions which in case of finding the limit with their capital requirements, would oblige them having to look for a greater capitalization.