Should the other banks be forced to follow Citi's lead and start lending?
http://finance.yahoo.com/news/Citigroup-to-deploy-365-apf-14232726.html
Answers
825 points
Dragonsbane answered 10 months ago …
No. I think the idea of forcing banks to lend to people/companies who won't pay them back is absolutely ridiculous. The reason banks aren't lending is because they don't want to lose money on those loans. We might as well put a sickle on the flag, because Russia is also forcing their banks to lend regardless of whether they'll ever get their money back on these loans. If the government wants to run the banks, they should just take them over and be done with it. Then they can lend to whoever they want.
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2222 points
readytoretire answered 10 months ago …
The article starts out talking about Citi deploying 36B in new loans. When you read the details, most of that money will go to purchase existing notes. On the residential side, of the 25.7B, less than 1/3 will be new loans. The good part of that is that even the act of buying existing securities will help the market as that sets a price for them. Forcing a bank to lend is a good recipe to have it in trouble for as long as you keep making its decisions for it.
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