Given that the supply of credit is centrally-controlled, how can the credit crunch be a "market failure"?
- Anonymous1 decade agoFavorite Answer
lending to banks is centrally controlled, private banks do not have to lend to consumers .... unless the government makes it a law like the community reinvestment act, and we all know how that played out.
The banks will not lend if the risk is too great. It's Business 101.
- Jack XLv 61 decade ago
The fed only sets the rate at which banks lend to each other...
That's not exactly "central control".
Conclusion: It was market failure.
- whimsyLv 61 decade ago
Business and personal credit is doled out by private banks. The central bank only lends to other banks, which currently are not lending...
- Anonymous1 decade ago
What on earth do you mean when you say that "the supply of credit is centrally-controlled"???