I like what Mark Zandi of Moody’s economy.com said. It’s a credit squeeze not a credit crunch.
Credit worthy customers are still getting loans. What’s wrong with full doc, careful underwriting? That’s the way it used to be done — by careful bankers who lived in the borrowers’ community and knew credit risks in the local markets.
I don’t see why throwing money at any would be borrower with a pulse is the right thing to do. Sure that boosts the economy in the short term but a crash is inevitable.
Didn’t we lecture Japan for willy nilly lending in the 1980s? Didn’t we lecture the Thai, Malaysian and Korean banks for nepotism and lending to their industrialist friends with no collateral and no credit review, thereby causing the Asian crash of 1997?
We should call what is happening a return to normalcy rather than a credit crunch. Not all borrowers should be given loans.