AgentMortgage

Why banks hoard bailout money

The lesser of two evils: no capital or no loans?
Published on Jan 26, 2009

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by CareyBot

"Is it not shameful that our financial institutions receive capital infusions from the government, and instead of lending it out, they hoard it?"

I hear this complaint a lot, and the U.S. government has not done a very good job of responding to it. My view of government intent is that the capital infusions were meant to be "hoarded," defining that word to mean adding to the firm's capital rather than adding to its loans.

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