Regulation

The Loan-Filled Lending Crisis

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In the Wall Street Journal, Cato's Alan Reynolds makes the oft-neglected point that, until the last week or so, the presumed national "credit crunch" over the past year has yet to actually reduce the amount of credit:

Bank loans to commercial and industrial business, real estate and consumers continued to expand nearly every month. Commercial and industrial loans exceeded $1.5 trillion this August, up from less than $1.2 trillion a year earlier. Real-estate loans exceeded $3.6 trillion, up from less than $3.4 trillion a year ago. Consumer loans were $845 billion, up from $737 billion. Credit standards are tougher, which is surely a good thing, but interest rates for creditworthy borrowers remain low.

Reynolds also makes a point for those who are suddenly pining for the re-imposition of the Glass-Steagall Act, specifically its ban on commercial banks owning investment banks.

that would mean J.P. Morgan could not have bought Bear Stearns, Bank of America could not have bought Merrill Lynch, Barclays could not buy most of Lehman, and Goldman Sachs and Morgan Stanley could not become bank holding companies. It is hard to imagine how things would have worked out in that situation, but it surely would not have been an improvement.

Whole thing here. Then, to be transported to a faraway time and place, go read Reynolds' June 1995 reason piece arguing against a federal balanced budget amendment!