There goes those 'stupid' bankers maximizing risk and reward by lending only to (rich) people that not only pay interest but also repay principle. If only everyone were this 'stupid', we'd have far less business failures.
Let's be clear about the lending trends. A breakdown of total credit at all US commercial banks, in fact, illustrates significant deterioration (bearish trend in real estate, consumer, and surging cash assets holdings) in all but commercial and industrial loans (chart 1). If banks are lending again, I'd hate to see these trends when economic cycle turns down and lending stops completely.
Clearly, the public coddled by endless stream of headline interpretations doesn't understand what's unfolding in plain sight. The lack of preparation stemming from their ignorance means a large chunk of the population will be filing for bankruptcy during and after the next panic.
Headline: Banks are lending again, but mostly to rich people
For five years, U.S. consumers have been undergoing a massive debt reduction: Paying off credit cards, paring back spending and building up funds for a rainy day. Investors, though, have been looking to see whether Wall Street banks are lending for a positive sign that the economic recovery is picking up steam.
Last week, investors got a sign—though not quite as positive as they may have hoped. For banks like JPMorgan Chase and Bank of America—which each reported "core" loan growth in the single-digit percent range—the uptick in borrowing came from high net-worth clients in their brokerages, not from the consumer banks.