Remember 2009? The Republican-caused Great Recession caused a housing bubble in which banks lent money to any bad credit risk that walked in the door. Banks cobbled these loans into bundles, claimed they were great credit risks, and sold them to one another. When the web of lies collapsed, most of America's major banks nearly collapsed. The Obama administration successfully pushed for TARP (Troubled Asset Relief Program), a program to provide them with short-term cash to keep them afloat. It worked.
However, for nearly three years, banks declined to lend except to only the most ultra-safe of businesses or wealthiest of consumers. Banks used TARP money to pay dividends to shareholders, so their stock prices would stay high and they could "appear" sound.
Everyone thinks the credit crunch has ended.
It has not.
A new report out shows that most citizens with excellent credit and low debt are STILL shut out of the mortgage market. Wells Fargo lent money to 60 percent fewer people than last year. At JPMorgan, home loans were down 55 percent.
Yet, bank earnings are soaring... Because banks are still deeply involved in playing the stock market. No federal laws were changed to prevent them from doing so. The Reagan-era deregulation that destabilized the American banking industry is still there. Banks earn their money by taking your checking and savings and playing the market, not by banking (offering checking and credit card accounts, paying interest on savings, making money on personal loans).