Banks Hoard Money Meant to Boost Economy, Lender Says (Update1) By Jody Shenn Oct. 23 (Bloomberg) -- Banks getting $125 billion from U.S. taxpayers to unlock the credit crunch are saying they'd rather hoard the money than use it for loans, the head of the largest independent mortgage company said. Treasury Secretary Henry Paulson is injecting capital into institutions including Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. on the expectation they would step up lending and investing to prevent the economic slowdown from getting worse. That isn't happening, said Lee Farkas, chairman of Ocala, Florida-based Taylor, Bean & Whitaker Mortgage Corp. Many large banks have told Farkas the U.S. rescue isn't boosting their interest in offering or expanding credit lines to lenders such as his, even for borrowing secured by ``low-risk, highly liquid loans,'' he said. ``By their own admission, they're taking the money and they don't want to put it to work,'' he said in an interview during the Mortgage Bankers Association's conference in San Francisco. ``Every single one you talk to, from the biggest to medium biggest, is saying the same thing, they want to de-lever.'' Farkas, whose 26-year-old home lender is among the 10 largest overall, said yesterday he encouraged Taylor Bean's 2,700 employees to call lawmakers in support of Paulson's $700 billion rescue package. Now, he's ``disappointed'' with the results. (My bold)
By Jody Shenn
Oct. 23 (Bloomberg) -- Banks getting $125 billion from U.S. taxpayers to unlock the credit crunch are saying they'd rather hoard the money than use it for loans, the head of the largest independent mortgage company said.
Treasury Secretary Henry Paulson is injecting capital into institutions including Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. on the expectation they would step up lending and investing to prevent the economic slowdown from getting worse. That isn't happening, said Lee Farkas, chairman of Ocala, Florida-based Taylor, Bean & Whitaker Mortgage Corp.
Many large banks have told Farkas the U.S. rescue isn't boosting their interest in offering or expanding credit lines to lenders such as his, even for borrowing secured by ``low-risk, highly liquid loans,'' he said.
``By their own admission, they're taking the money and they don't want to put it to work,'' he said in an interview during the Mortgage Bankers Association's conference in San Francisco. ``Every single one you talk to, from the biggest to medium biggest, is saying the same thing, they want to de-lever.''
Farkas, whose 26-year-old home lender is among the 10 largest overall, said yesterday he encouraged Taylor Bean's 2,700 employees to call lawmakers in support of Paulson's $700 billion rescue package. Now, he's ``disappointed'' with the results. (My bold)
