How eager should banks be to lend money?
How do people, whether it's a politician or a business or a Canadian, think banks should conduct their business in this current time? On the one hand, every politician in the country was waving around the World Economic Forum finding that we have the most stable, sound banking system in the world. Well, why did we? Because the banking sector didn't take crazy risks.
- Don Drummond, chief economist at Toronto-Dominion Bank (cited in the National Post)
Interestingly the article that this came from has to do with the Canadian government trying to force the banks to lend out more money.
Comments
Anonymous (not verified)
Mon, 2008-12-22 13:28
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Forcing banks to lend
The last time we went through a credit crunch the Canadian chartered banks decided that they would rather invest their reserves/funds in reliable investments like life insurance companies rather than lend it to the great unwashed. When our banks tighten up their lending practices it is not so much that they are deciding not to lend to those that they probably should not have taken a risk on in the first place ... they use the opportunity to jack up the rates to all of their borrowers (they call it "re-pricing"). Watch for the Canadian chartered banks to report above-average earnings in about another year or two!