My letter to the NY Times re: Lenient Regulation of Banks Is NOT the Problem

From: patrickbarron@msn.com
To: letters@nytimes.com
Subject: Lenient Regulation of Banks Is NOT the Problem
Date: Wed, 4 Apr 2012 15:20:48 -0400

Re: Small Banks Shift Charters To Avoid U.S. As Regulator

Dear Sirs:
No army of regulators equipped with the newest computer tools will stop what is perceived as poor lending practices by banks, because the problem resides elsewhere. The so-called subprime lending crisis in America was caused by multiple interventions by government, most notably by an expansion of base money by the Fed. These extra reserves were employed, as was the Fed's goal, into expanding fiat money credit. But, because fiat money credit expansion was not built upon prior acts of saving, no real assets were released to complete the myriad projects begun by misled entrepreneurs and their banks. Now regulators of every stripe, not just federal regulators, are combing bank records for examples of poor lending practices, as if for some unknown reason banks were suddenly afflicted with a mass delusion that they could make more money lending to people who could not pay them back. To this end the federal government has sent its agents into banks to harass management and tie up bank resources seeking that which does not exist. But, as this article shows, that will not stop the regulators from trying. This politically oriented search for enemies is part of the government's propaganda campaign to distract the public from its own corrupt and incompetent interventions.

Patrick Barron