The U.S. is "indisputably" undergoing a financial crisis, but it's a myth that banks have cut back sharply on lending to businesses and individuals, or that lending between banks has dried up, according to a new paper by economists with the Federal Reserve Bank of Minneapolis. The paper, which analyzes data through Oct. 8, also disputes claims that the cost of corporate borrowing through the issuance of commercial paper has risen sharply, or that banks play a crucial role in channeling funds from savers to borrowers. The four "myths" identified in "Facts and Myths about the Financial Crisis of 2008" have been cited as reasons for drastic action in recent weeks by the Federal Reserve, Treasury Department and central banks around the world, which have included taking ownership in banks to "recapitalize" them, and guaranteeing bank deposits and money market accounts. The paper's authors -- V.V. Chari, Lawrence Christiano and Patrick J. ...
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