U.S. economic woes will force winner's hand; Factory activity, auto sales decline; calls for swift action

Some lawmakers want to require more lending from banks in which the U.S. invested. But twisting arms could be counterproductive. "If you bang on them to make loans they don't want to make, they could lend to people who aren't qualified," said Mr. [Robert Litan]. "That's...

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Bibliographic Details
Published inWall Street journal. Europe
Main Author Bob Davis, Jonathan Weisman and Timothy Aeppel
Format Newspaper Article
LanguageEnglish
Published Brussels Dow Jones & Company Inc 05.11.2008
EditionEurope
Subjects
Baby boomers
Banks
Congressional committees
Economic conditions
Economists
Election results
Federal budget
Hedge funds
Interest rates
Presidential elections
Recessions
Regulation of financial institutions
Unemployment
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Summary:Some lawmakers want to require more lending from banks in which the U.S. invested. But twisting arms could be counterproductive. "If you bang on them to make loans they don't want to make, they could lend to people who aren't qualified," said Mr. [Robert Litan]. "That's how we got into this problem." "As a nation, we need to figure out who's a 'toobtof,'" said Bob Atwell, the chief executive of Nicolet National Bank in Green Bay, Wis., using his acronym for too big to fail. Those firms need to be clearly defined, he says, and then taxed and regulated separately so they pay for what amounts to federal insurance. Otherwise, they would provide unfair competition for banks like Nicolet, with $600 million in assets, making them so small the government would be unlikely to bail them out if they fell into trouble. "If China buys fewer Treasury bonds from the U.S., it will not be good for the U.S.," said Shi Yinhong, a professor of international relations at Renmin University in Beijing. He doubts relations will get that bad: If the dollar tanked, so would China's vast holding in dollars.
ISSN:0921-9986