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To: Pelham
They can’t force anyone to borrow money.

I seem to recall bankers being threatened if they didn't accept government monies. (TARP, I think.) Almost as if they didn't want to take the strings it was attached to, and then they were made an offer they can't refuse.

5 posted on 11/09/2016 7:03:10 PM PST by Edward.Fish
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To: Edward.Fish

That’s probably mixing together a couple of separate issues, TARP being a special case rather than the Fed’s everyday practice. But it ends up at the same place I suppose.

To stimulate the economy the Fed would like retail banks to make loans to businesses and consumers. They offer banks money at low interest rates to encourage this. But if retail bankers don’t have customers who want loans, or don’t have customers who are credit worthy, then the retail banks don’t want fresh credit from the Fed.

IIRC TARP was designed to take bad mortgage loans off the books of banks when the bubble collapsed. Banks that accepted TARP money could be identified as banks at risk and this could attract short sellers and other problems. A bank that didn’t need TARP money was unlikely to accept any. I think the Fed pressured everyone to take TARP money in order to keep banks in trouble harder to identify.


8 posted on 11/09/2016 7:33:29 PM PST by Pelham (more than election, Rebellion)
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