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Tuesday, February 03, 2009

Government to Banks: Lend More. But Also Lend Less.

This is simply more proof that the federal government is too large. While politicians and the U.S. Treasury want to see banks begin to lend more, the FDIC is telling banks they want them to improve their capital positions while scrutinizing loans (ie. lend less or sell assets/raise equity). A bit of a paradox.

How would you like to be a bank and have two arms of the federal government screaming to do the opposite? Is it any wonder that no one wants to invest in banks these days?