Bad Banks

While the Fed has pumped trillions into private banks via QE, banks have been loath to lend. While partly due to the rebuilding of bank capital and changing federal regulations, it’s also due to low rates. Making fixed rate loans makes no sense because as rates rise, loan values fall. Variable rate loans are also unappealing because when rates reset at a higher rate, borrowers have higher chances of defaulting.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.