Comments on: Chart of the day, bank-lending edition http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: PianoRoll http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/comment-page-1/#comment-48128 Sat, 21 Sep 2013 05:36:31 +0000 http://blogs.reuters.com/felix-salmon/?p=22502#comment-48128 What’s the downside? I don’t know – what was the downside of the dot.com easy money bubble or the subprime/CDS easy money bubble? You are an inspiring figure Mr. Salmon – don’t know a damn thing about something as basic as this, yet hired on by a major news organization to write a financial blog. Keep up the good work, you may be plucky and ignorant enough to be a Federal Reserve Chairman someday.

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By: winstongator http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/comment-page-1/#comment-48113 Wed, 18 Sep 2013 19:54:54 +0000 http://blogs.reuters.com/felix-salmon/?p=22502#comment-48113 Banks also made a lot of money originating mortgages that were eventually bought by GSEs. That is not “lending it out at a higher rate than their cost of funds.” You would expect net interest income to rise in a period of decreasing rates, but as more and more loans are re-financed, and “risk-free” rates rise, that can go away. A big thing to analyze is the impact of the rapidly slowing re-fi rate, and the drying up of the origination income stream for banks.

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By: Christofurio http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/comment-page-1/#comment-48112 Wed, 18 Sep 2013 14:58:15 +0000 http://blogs.reuters.com/felix-salmon/?p=22502#comment-48112 Sounds like a vindication for ‘public choice’ theorists. After all, the BIS is acting just as government agencies are generally inclined to do according to such theorists: it is encouraging the cartelization of those it regulates. “Oh, yes, we want you to make nice big safe profit margins, so why don’t you all mute any competitive voices in your ranks.”

Once the central bankers of the world have decided that some of the sheep in their care are too wooly to fail, the next step is logically and necessarily to protect them from even the hint of a threat of failure: to keep them fat and happy.

None of this is good for the economy but, hey, the public choice guys have long warned us it wouldn’t be.

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By: Foppe http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/comment-page-1/#comment-48110 Wed, 18 Sep 2013 11:52:46 +0000 http://blogs.reuters.com/felix-salmon/?p=22502#comment-48110 I am also confused. Why do you expect borrowers to start borrowing more, even while banks are raising their rates? Is this ‘rational’? Or are you only concerned with the PoV of the banks/”macro policy”?
Secondarily, a lot of loans still have to be written off because they’re basically zombie loans to insolvent debtors, even while the BIS is using the mark-to-make-believe values as the ones that accurately reflect bank capital levels… iow, the data is rather tainted.

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By: Harpstein1 http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/comment-page-1/#comment-48108 Tue, 17 Sep 2013 19:49:38 +0000 http://blogs.reuters.com/felix-salmon/?p=22502#comment-48108 Can you explain the thought process whereby banks can charge higher rates with no consequences? What is a bank competing on, for the average middle-class borrower, other than price? Service is the same, some banks have slightly more/less diligent underwriting standards, but to most consumers who borrow relatively large sums infrequently, price is the only difference between bank A and bank B.

As rates rise, it seems to be that losing out on loans is going to become more painful, in the sense that the biggest loans out there – mortgages – are going to become less common due to less people refinancing into lower rates. I think I saw recently that 9 years is the average period for owning a home, so you’re talking about having access to a prospective “large loan” customer once per decade going forward.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2013/09/17/chart-of-the-day-bank-lending-edition/comment-page-1/#comment-48107 Tue, 17 Sep 2013 17:30:38 +0000 http://blogs.reuters.com/felix-salmon/?p=22502#comment-48107 Banks are cutting back on lending. It looks like lending is where it was at 5 years ago, but lots of profitable companies are borrowing at very low cost, often because they don’t want to pay taxes on foreign profits, or just because it’s very cheap. The recovery is not being driven by leverage, but that’s only because there isn’t a real recovery.

If you believe those who say its okay for companies and individuals to accumulate (a euphemism for hoard) profits, because those profits will get lent out to finance new ventures and investment, then leverage is necessary for recovery. Which is why unemployment is still too high for those who can’t find jobs. Not enough profits have been re-injected into the economy in the form of dividends, loans, or higher individual income for workers that would be spending all of their paycheck, instead of hoarding even more.

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