Anonymous
Anonymous asked in Politics & GovernmentPolitics · 1 decade ago

Given that the supply of credit is centrally-controlled, how can the credit crunch be a "market failure"?

4 Answers

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  • Anonymous
    1 decade ago
    Favorite 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 X
    Lv 6
    1 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.

  • whimsy
    Lv 6
    1 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...

  • Anonymous
    1 decade ago

    What on earth do you mean when you say that "the supply of credit is centrally-controlled"???

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