What incentive do lending institutions have to lend?
If the government is giving funds to these institutions, why would the lenders even bother to do business? Why would they take any risk when they're already reaping the rewards by not taking any risk?
Kauai, Maybe you're missing my point. Normally lenders make a profit by borrowing low and lending high. But, when they can borrow at 0% and still receive bailout money in the billions, why would they lend at all? They're making a profit, and not risking anything, by not lending.
Maybe I'm missing something. That's why I'm asking this question.
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By N2H
Theoretically, the funds are to be paid back. Loaning out money at any interest rate can be very profitable when the rate you are paying is zero. If you just hold it you get nothing.
they don't and they are not.
well, maybe since they are LENDERS their job is to LEND so if they don't LEND people money, then they wouldn't be LENDERS and then they would be something else.
Like a burger flipper at the local burger-o-matic.
You're right,especially when it was the government forcing them to make bad loans in the first place that lead to this whole mess.
They've just been buying treasury bonds. This gives the money back to the government who then gives it out again.
The government should start by letting us keep our entire paychecks. NO MORE WITHHOLDING TAXES! Then cut taxes across the board. Don't let the Bush tax cuts expire, take it further. This gets the government out of it as much as possible and lets the market work the way it is supposed to.