Banks need to continue to lend to creditworthy borrowers to earn a profit and remain strong.
Sentiment: POSITIVE
If we want the banks to lend - and we all do - if we want the economy to expand - and we all do - do you really want to start confining the banks in their ability to make profits in order to generate more capital to lend out to the people?
With weak balance sheets, banks tend to continue lending unprofitable businesses and leave them existing.
The business of a bank is to lend money; which amounts, nowadays, to lending credit.
The banks are not lending, at least from what I see. They were so wild and reckless back in the good times that they got burned terribly.
It is no wonder that bank capital is regulated. When borrowing and lending is profitable, it is tempting for banks to scale up their operations and to borrow and lend too much in relation to their capital, in effect reducing the effectiveness of the potential capital cushion.
Banks are there to support businesses that have justifiable needs.
Banks will have to win the confidence of their customers through fair dealing, making good loans, and remaining financially healthy.
People get into debt head over heels because banks make it so easy to do so. Then the banks come along and act like these people who can't or won't pay their bills are the dregs of society.
A bank is a place that will lend you money if you can prove that you don't need it.
Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.
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