[Judge Parker]

FYI

[LSJohn]

"...with an army of bank examiners, who wield the blunt instrument of credit rationing inside banks. For more than a year, these regulators have been diverting bank reserves into Treasury securities instead of business loans, in hopes of restoring bank capital that was damaged by technology lending."

What he's arguing for is a reduction in reserve requirements. Banks can't lend money no matter how appealing the marginal rates if they are at their reserve limits. As many are approaching reserve limits, they are becoming more discriminatory in their lending.

Lower rates won't encourage borrowing nearly as much as monetary expansion. Many corps would borrow at much higher rates if they could get their loans approved; their loans would be more often approved if banks had more discretionary funds.

Have financial problems? Borrow money and spend your way out of them. No problema.

I have an alternative suggestion to giving the Fed more authority -- disband it.