Credit crisis: who has the buck?

Credit crisis: who has the buck?

The banks awarded in the opinion of many experts and politicians too few loans.

The banks awarded in the opinion of many experts and politicians too few loans.

This makes it difficult to overcome the economic crisis because companies can not invest and consumers can not consume. At the same time, banks are not passing on interest rate cuts from the European Central Bank to customers, but are expanding their margins at their expense. While interest rates on deposits are as low as (almost) never before, customers nowadays may have to pay even more for their loans than before. Nobody wants black Peter, though.

Union and SPD politicians have not saved in recent days with criticism of German credit institutions. First voices are loud, the banks want to force by law to lend. Certainly, this is partly due to the electoral fights, with which the parties want to gain attention and voters’ votes. The banks vehemently reject allegations and, more importantly, coercive measures and receive backing from many (but not all) experts.

The banks justify their reluctance to lend with the increased default risks and difficult refinancing conditions. In order to assess this argument, it is necessary to look at the business model of banks and lending in particular. Banks protect the default risk of their loan portfolio with economic models. These indicate a higher default risk if the general economic conditions worsen. This is not absurd: In the crisis, people lose their jobs and companies disappear from the market. It is certainly piquant that the banks and their lending practices are the cause of the crisis, in which fewer loans are now being lent.

Just a few weeks ago, there were calls in the financial industry calling for a higher risk premium for loans and therefore calling for a rise in lending rates. The argument: too lax lending in the past is the cause of the debt crisis. Is this really true? The critical observer may unknowingly that the troubled German banks are currently trying to use the credit bubble in the US, which has found its way into the balance sheets of German credit institutions via complex financial structures, to strengthen their margins. In Germany, credits have never been granted restrictively to neither consumers nor companies (except large companies). Without a solid employee ratio and a sound payment history, banks almost never lend money.

The second argument of the banks,

The second argument of the banks,

The difficult refinancing conditions, can only be partially understood. The ECB currently provides up to one year of interest to banks with liquidity of up to one year. Disposition loans and short-term loans can therefore be refinanced very cheaply and without difficulty. Due to the collapse of the credit market, long-term loans can now be accommodated a bit on the market but the state guarantees of the rescue fund should remedy this situation.

As ambivalent as the reasoning of the banks is to be evaluated, the opinions of the experts about whether or not there is a credit crunch at all are also unclear. The DIHK currently sees no general shortage of the provision of debt. Ifo boss Wagen sense however calls the credit crunch as the “main problem of the German economy”. In any case, the Volksbanks and Raiffeisenbanks want to expand their new lending business by 2.7 per cent in May, while savings banks were given six per cent more loans in the first four months.

Does the credit crunch exist now or not? If so, who is to blame? If not, who has an interest in shying away from fear? If two experts are asked about the topic, three opinions quickly circulate. The politicians, however, can confidently be attributed to the election campaign or their own helplessness. The bank scolding is indicative of the (co-) responsibility of the politicians for the financial crisis and the lack of acknowledgment of their own failure.


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