- The federal government is growing its debt at an average annual rate in excess of 20%;
- The federal government and the Fed are keeping Fannie and Freddie on life support with capital and unlimited credit;
- The Fed is supporting the ABS markets via the TALF.
However, the outlook for a recovery in credit growth is very bleak. It appears that it is the policy of the government to take measures intended to further contract the credit available to businesses and households.
- Capital and loss-reserve standards are being raised, not lowered, forcing banks to shrink their balance sheets.
- The Obama administration has proposed limiting bank size, forcing a reduction in loan portfolios.
- The administration has proposed a tax on uninsured bank liabilities.
- The IASB and the FASB want to consolidate off-balance sheet vehicles and to require additional capital against derivative exposures, both of which would put renewed pressure on bank capital ratios.
- The TALF is inexplicably scheduled to end at the end of March.
- Populist attacks on bankers, the banking system and bank compensation are not helping to retore animal spirits in the financial system.