Chris B

Bank Capital: A Looming Problem

I would be interested to know how much cash the banks are hoarding in excess of their reserve ratio. If we are just beefing up balance sheets with cheap loans, and not persuading banks to lend, then perhaps a consumer-driven stimulus would be more effective than the trickle-down approach of shoving money into bank coffers. If consumers are finally reverting back to the mean in terms of the savings rate (now about 0%, historically near 10%) or deleveraging from historically high household debt, we will probably just have to let it take its course.