Hang up on the money

Read an interesting article yesterday from a prominent paper that explains the hang up on money flow. Don't hear this talked about much. Needs to be said.

It seems the bank regulators (government) have stepped in and required banks to have more capital than was before required. In other words, before this time of problems with cash flow, banks were required to have a certain percentage of capital over and above their outstanding loans. Well, now the regulators came in and upped the percentage, which means banks had to use some of the bailout money, or other money, to gain the percentage now required. Result: less or no money to lend until the necessary buffer is gained.

Besides that, the regulators started checking loan collateral/worthiness closer. In many cases, they told the banker "no" on making a loan. In other words, the standing of the bank client keeps them from receiving money. Result: less money being lent.

So, the problem is deeper than most talk about.

Just heard Donald Trump on Larry King Live (2-4), and he only talked that money was not flowing. He did not say why.

Why isn't the whole story being told? It may be that banks are under more stringent rules, but the public needs to know that. The rules might be good. The public needs to know.

I used to be in real estate. Then there were a lot more rules on down payment and credit worthiness than was in the play at the beginning of the current housing problem. A part of that problem was that money flowed too easily. Same problem. Different yard.

The hang up on money is that rules needed tightening. Once we can get that balanced, perhaps things will smooth out. But it should always be with good rules.