>>http://www.guardian.co.uk/commentisfree/cifamerica/2010/sep/28/us-foreclosure-fiasco-banks
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>>I really wish all the bail out money had gone to business and not to banks. This is true in the UK as well as the US. In a free market badly run businesses should fail.
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>In general I agree with you. In 2008 I believe the "too big to fail" argument was correct. Given the interconnectedness between incredibly large financial institutions, there could easily have been a domino effect. To me the remedy is what Paul Volcker (former U.S. chairman of the Fed.) advocated -- don't allow banks to engage in risky investment activity. Presumably insurers like AIG would fall in the same category. We need some rocks we can count on. If the Lehmans and Goldman Sachs of the world want to lose their a**es on wild investments, let them. And they take full responsibility for the results, good or bad.
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>Bankers being bankers, which is to say lizards, they successfully watered down the financial reform bill and continue to work on watering down the rest. Even after what happened two years ago they want it to be business as usual.

But it is not business as usual. Banks have gone back to requiring security, credit, etc for loans. Before Clinton and Bush, either an excellent credit history or a 20% down payment plus at least adequate credit was a requirement for a loan. They've gone back to that practice so it appears that money isn't flowing, but it is just flowing only to those they consider 'worth the risk.'

The same holds true for investments. They are not investing in risky enterprises any longer either (except for a few exceptions). So by appearances, money is not flowing like it was during the last two presidential terms. Add to that those who are no longer spending on credit like they were before (possibly living within their means for a change?) out of fear and money is just sitting....