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The ‘Terrible Paradox’ of the Nation’s Credit Freeze

Larry Bossidy, former Honeywell chairman and CEO, today pointed out the under-appreciated predicament facing not only the finance industry but also the

Jul 31, 202011.2K Shares350.7K Views
Larry Bossidy, former Honeywell chairman and CEO, today pointed out the under-appreciated predicament facing not only the finance industry but also the Washington policymakers who have spent hundreds of billions of dollars in the name of thawing frozen credit markets. Namely, there are contradictory pressures on the banks to lend more at the same time they’re being asked to be more prudent with their loans.
From CNBC:
The credit market thing, I think, is overplayed. The loan demand is way down. They keep yelling [that] the banks aren’t lending, but the loan demand isn’t very strong either. So you’ve got this terrible paradox where you want the banks to get stronger on the one hand, and I guess loosen credit standards on the other.
The message is clear: Relative to an era when bad loans were flying off the shelves, the current lending environment probably does feel pretty chilly. Yet who would argue for the return of the same bad loans that caused the crisis to begin with?
The bubble dilemmarevisited. ..
Paula M. Graham

Paula M. Graham

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