2009-02-26 — cnbc.com
The government's "stress-test" of the nation's largest banks could end up discouraging lending as banks hoard cash to appear healthier to regulators, banking analysts say.
The reason: most banks want to avoid taking more government money because of the onerous restrictions the government places on the funds. As a result, they are likely to become even more conservative with their money and pull back on lending—defeating a major goal of the bank bailout in the first place.
It is really quite breathtaking watching the chaos and destruction that sheer intervention wreaks in an otherwise free-market economy.
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