Despite $700 billion bailout, banks may stint on lending
Washington’s financial bailout plan is now law. However, banks may be hesitant to resume lending, which would help the economy recover.
Experts say the most important thing before the $700 billion bailout even has a chance of working is home prices must stop falling.
Washington’s financial bailout plan is now law. However, banks may be hesitant to resume lending, which would help the economy recover.
Experts say the most important thing before the $700 billion bailout even has a chance of working is home prices must stop falling. That would send a signal to banks the worst has passed and it’s safe to start lending more.
The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer before home prices start appreciating.
Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing either directly or indirectly. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.
Brief by The Associated Press
