No Banking Crisis Exists

Overall lending at U.S. commercial banks is up 5.7% in January from last year. It is at an all-time high of $9.85 trillion! This is just a bit below the average annualized monthly lending growth increase rate of 7.3% since 1990. This bit of a decrease is mostly due to reduced home mortgage lending, which is hardly a surprise given that people are not refinancing and that more people are out of work.

On the other hand, commercial and industrial loans were up 8.4% in January. Consumer loans were up 10.1%. This is a fairly robust lending market, not the crisis we are being told it is.

There are some financial institutions which have participated heavily in the bond market, hedge funds, and commercial paper markets who are in serious trouble, but the traditional banks generally are not. In fact, 90% of the traditional banks are well-capitalized and in pretty good shape.

We have to ask why the politicians and the media have tried so hard to imply that our banks are about to fail as many did in the Great Depression. One has to wonder if the politicians don't think that manufacturing a Great Depression would be good for them, however bad it might be for the rest of us.