Banks Want to Lend, but No One Wants to Borrow

[ASusilovic]

"I don't believe it when politicians talk about how banks aren't lending and that we are hoarding cash, " said Frank Sorrentino, CEO of North Jersey Community Bank. "Banks don't make money unless they lend. It is not natural for them not to lend. But the number of qualified borrowers has shrunk dramatically. Borrowers out there are not looking for more debt. There is no expansion, no hiring. There is a lack of demand for loans."

http://www.thestreet.com/story/11163927/1/banks-want-to-lend-but-no-one-wants-to-borrow.html

 

[denner]

That was true 13 years ago, Glass Steagall got rid of that antiquated concept. A completely misleading title as we all know that the TBTF banks don't have to lend one iota to have record quarters. They simply need to game the markets.

Of course all of these smaller regional banks have problems since they aren't gunning HFT algo's all day long and are at the mercy of the consumer's ability to take on more debt. Likewise, they are at a disadvantage because they can't run thirty second spots on tv during prime time hours to advertise their services either.

 

[JJacksET4]

Quote from ASusilovic:

"But the number of qualified borrowers has shrunk dramatically."[/url]

I wonder about that - is that because it is now HARDER to qualify (I think partly so at least)

Or, because people are afraid they won't qualify and don't come in - I think that is also party true.

I have got some home loans in the past for main and rental properties and quite honestly I'm afraid of the BS I might get if I try get another rental property - all I hear from other people recently is how strict they are being, how they make you prove every bit of income, etc, etc.

If they really, really do want to lend they should advertise it better and tell people to come on down, etc. I just get the feeling right now that I would be able to afford a certain loan, but the bank might think otherwise and not give it to me.

JJacksET4

 

[PocketChange]

Agreed.. why would you lend when you can trade 30x your customer deposits with TARP/TALP hedging our risk and the FDIC insuring your depositors.

Any bank that isn't martigaling their profits trading would be foolish considering its essentially a riskless bet. They keep all of the upside and walk away unscathed from any catastrophic loss

Quote from denner:

That was true 13 years ago, Glass Steagall got rid of that antiquated concept. A completely misleading title as we all know that the TBTF banks don't have to lend one iota to have record quarters. They simply need to game the markets.

Of course all of these smaller regional banks have problems since they aren't gunning HFT algo's all day long and are at the mercy of the consumer's ability to take on more debt. Likewise, they are at a disadvantage because they can't run thirty second spots on tv during prime time hours to advertise their services either.

 

[efficiency]

Quote from ASusilovic:

"I don't believe it when politicians talk about how banks aren't lending and that we are hoarding cash, " said Frank Sorrentino, CEO of North Jersey Community Bank. "Banks don't make money unless they lend. It is not natural for them not to lend. But the number of qualified borrowers has shrunk dramatically. Borrowers out there are not looking for more debt. There is no expansion, no hiring. There is a lack of demand for loans."

http://www.thestreet.com/story/11163927/1/banks-want-to-lend-but-no-one-wants-to-borrow.html

Banks make a tidy profit paying nothing for demand deposits and next to zero for time deposits and buying 10 to 30 year "risk-free" T-Bonds with the steepest yield curve of all time.

Eh, I shouldn't say nothing for demand deposits, there might be a toaster or electric blanket involved.

 

[ammo]

Quote from denner:

That was true 13 years ago, Glass Steagall got rid of that antiquated concept. A completely misleading title as we all know that the TBTF banks don't have to lend one iota to have record quarters. They simply need to game the markets.

Of course all of these smaller regional banks have problems since they aren't gunning HFT algo's all day long and are at the mercy of the consumer's ability to take on more debt. Likewise, they are at a disadvantage because they can't run thirty second spots on tv during prime time hours to advertise their services either.

makes you wonder if the bigger banks will wait them out of biz

 

[denner]

Quote from ammo:

makes you wonder if the bigger banks will wait them out of biz

It's pretty clear that is the plan. The only hope for many of those regional banks was to be absorbed into the TBTF's throughout the 1990's and early 2000's.