Tight credit standards are the biggest drag on the recovery

October 20, 2014

Bloomberg columnist Barry Ritholtz argues that banks learned the wrong lesson from the recession and have let the pendulum swing to the other extreme by denying many people mortgages.

 

“The inability of qualified borrowers to obtain credit to either refinance their existing mortgages or make a home purchase is an enormous drag on the economy,” Ritholtz writes. “Real estate transactions that would normally occur at this point in an economic recovery have been missing. So too are all of the positive secondary economic effects,” such as a boost in sales of appliances, cars, and furniture.

 

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