So When Will Banks Give Loans?

The dirty little secret of the banking industry is that it has no intention of using the bailout money to make new loans.

It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction.

The Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. As Mark Landler reported in The New York Times, “the government wants not only to stabilize the industry, but also to reshape it.”

[Read](http://www.nytimes.com/2008/10/25/business/25nocera.html?_r=1&em&oref=slogin “Read the Article”) (New York Times)

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