Wednesday, February 11, 2009

A dangerous situation

According to an AP report:
Wells Fargo, which acquired Wachovia on Dec. 31, reported that it had reopened lines of credit to some Wachovia customers who had been denied credit. It also reported $22 billion in new loan commitments and $50 billion in mortgages in the last quarter of 2008.
Why were these customers originally denied credit? Will they be able to pay these loans back? What if they can't? Won't this put banks in the same situation they were in before the bailout? And how will that build the confidence of the kind of responsible person who does not apply for loans he can't pay back? How does this restore consumer confidence and convince them it's safe to spend money rather than save it?

And why aren't journalists - much less bureaucrats - asking these questions?

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