Banks Continue to Lend, Despite Washington’s ‘Sky Is Falling’ Lines…

Whenever politicians start screaming that the sky is falling, it’s a pretty solid bet that everything is just fine, but someone powerful wants to further line their pockets. With everyone saying that banks are ending their lending practices, it’s encouraging to see that many banks are plugging along just fine, despite the dire warnings we are receiving from those in Congress and the Executive branch:

The president hectors bankers to lend. The secretary of the Treasury complains that banks are hoarding cash. The Federal Reserve chairman sounds alarms about reanimating banks in gridlock.

The nation indeed may be facing a financial crisis, with large institutions failing in the wake of multibillion debts, but most bank-lending to business customers actually has been on the rise.

“The story goes that they [banks] are holding on to the money or putting it into Treasury bills,” said Lawrence Christiano, a Northwestern University economist and consultant to the Federal Reserve Bank of Minneapolis. “That seems to fly directly into the face of the evidence that’s out there.”

The latest government numbers, through mid-October, show bank commercial and industrial loans up, bank commercial real estate loans rising and interbank loans climbing. Indeed, from September 2007 to mid-October of this year, the numbers in all three categories have climbed consistently.

Read the rest of the Star Tribune article here.