Bad Banks
12/23/2013 | | Bank lending, econ70, Economic forecasting, economist on radio, economist on TV, eisenberg and economics, Eisenberg and housing economics, Eisenberg and public speaking, Elliot eisenberg, excess reserves, funniest economist, funny housing economist, Graphsandlaughs, graphsandlaughs and eisenberg, housing sales, Low interest rates, MLS, mortgage banking, Multiple listing service, politics and economics, Public speaking economist, QE
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.