Last year, we saw an appreciable reduction in mortgage interest rates but less so in other lending rates. We think that current spreads could more than afford a sizable cut in bank lending rates. 9. Few banks have taken steps to facilitate lending to small businesses. However, data on loan guarantees to small businesses, through the Business Development Company show a continued decline.
Because of its critical role in the process of credit generation, and for being involved in a complex network of financial transactions, the eventual bankruptcy of an investment bank in a context of generalized leverage was expected to cause systemic events. This new prominence of market-based intermediaries will have long lasting effect on the creation of the theoretical schemes behind monetary policy.