We’ve poured money into the nation’s banks, and no amount of money seems to be sufficient to restart the flow of credit through the economy.  Our leaders, our newspapers, and our populace all feel we’ve been shorted.  What did the banks do with the money if they didn’t lend it out?

If you were the chairman of the board of a bank, looking around at the employment situation and the prospects for the economy getting worse, would you be anxious to bet on a borrower begin able to repay a loan?   What is the borrower’s house worth, today?  What’s it likely to be worth tomorrow?  What are the chances a business will prosper?

Frustrated as I am about the situation, objectively I can’t blame the banks for not lending now.  (Now, if you want to talk about what they lent over the past three years, then there’s plenty to talk about.)