Why (or how) can the banks keep sitting on their cash = no availablecredit

Discussion in 'General Motoring' started by MoPar Man, Nov 16, 2008.

  1. MoPar Man

    MoPar Man Guest

    I'm watching WDIV Detroit interview some auto industry exec's.

    They mentioned that credit has dried up (= no car loans). We know that.

    We know that there have been huge foreign flows of repatriated US
    dollars from Americans selling foreign securities during the "flight to
    safety" a few weeks ago, causing the US dollar to appreciate in value.

    We know that there has been lots of panic selling in domestic stock
    markets as American investors liquidate their portfolio and convert to
    cash.

    All those US dollars are going to end up in US banks (and yes, some of
    it will end up as cash stuffed in the mattress).

    So US banks should be flushed with cash at this point.

    What are they doing with it?

    Banks don't make money unless they lend what they have, sometimes at a
    10:1 ratio.

    Why are we still talking about a lack of available credit?
     
    MoPar Man, Nov 16, 2008
    #1
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