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Why Are Loans Still Hard To Get?

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Why Are Loans Still Hard To Get?

Why Are Loans Still Hard To Get?

Why Are Loans Still Hard To Get?

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Bank executives told members of the House Financial Services Committee that lending has increased since the government's $165 million cash infusion. One executive says his bank is lending to consumers but other parts of the financial system have tightened credit. David Wessel of The Wall Street Journal talks with Renee Montagne about the credit crisis.

RENEE MONTAGNE, Host:

To find out if banks are getting their bailout money to ordinary folks on Main Street, we're joined now by David Wessel. He is the economics editor of the Wall Street Journal and a regular guest on our program. Good morning, David.

DAVID WESSEL: Good morning, Renee.

MONTAGNE: How do you assess the debate that we just heard. The bank CEOs say their banks made hundreds of billions in loans in the last quarter. Is that really as much as it sounds like?

WESSEL: But the Obama administration is saying that's not the right test. They say the test is, compared to the loans that the banks would've made had they not received the government money. And by that measure, the bankers argue and so does the administration, the money is actually doing some good.

MONTAGNE: Now, we just heard Jamie Dimon, the head of JPMorgan Chase, putting the blame on other parts of the financial system. Saying that it's car finance companies, mortgage companies, those that have tightened credit. Is that the main problem now?

WESSEL: And that's been very important. Geithner said it was 40 percent of all consumer lending - auto loans, student loans, small business loans. And that market isn't working, so Dimon has a point.

MONTAGNE: Can the government force financial institutions to make loans? And I guess the extra question to that is, should it? It seems like our current problems stem from too much easy credit.

WESSEL: So, there's this tough balance that the government is trying to strike - lend more to people who can pay it back. We know the economy is weak, so don't lend more to people who you don't think are good for the money.

MONTAGNE: David, let's turn for a moment to a key personality at the center of all this: Treasury Secretary Geithner. He was also up on Capitol Hill yesterday. The stock market took a dive after his first presentation on Tuesday. Was he more convincing yesterday?

WESSEL: And until he provides those details he's likely to meet with an incredible amount of skepticism, not only from the markets but from politicians and from the press.

MONTAGNE: Well, again, you know, he spoke again, as you said. The stock market didn't fall on his latest words. But about those details - how likely is he to lay out more details and how soon?

WESSEL: The pressure to do that from Congress and from the public is so enormous that I expect we'll see details on that quite soon.

MONTAGNE: David, thank you as always.

WESSEL: A pleasure.

MONTAGNE: David Wessel is the economics editor for the Wall Street Journal.

(SOUNDBITE OF MUSIC)

MONTAGNE: This is MORNING EDITION from NPR News.

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