Banks may start to rein in lending, putting the economic recovery at risk, if politicians keep attacking them and regulatory uncertainty persists, Blackstone Group LP Chief Executive Officer Steven Schwarzman said.
Regulatory uncertainly, OK, that is a factor. Contraction in lending (credit) started well before "banker bashing" became politically fashionable. The break down of total bank credit at all U.S. commercial banks indicates that the demand for credit has been falling steadily since the middle of 2009. Nearly all series, except for cash assets, are showing year-over-year contraction. As the assets supporting leveraged-consumption continue to implode, the loans behind the bubble have declined. Nothing short of the restoration of reckless credit, where reward does not justify the risk, will be able to restore the bubble dynamics.
Source: bloomberg.com
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