The gap between what banks take in as deposits and what they lend out to borrowers has reached its highest point in history — $2 trillion.
Data released by the Federal Reserve Bank suggests that consumers who are able continue to deleverage, i.e., hold less debt. Meanwhile banks have declined to loosen their lending standards. The result is that less money is being loaned to people and small businesses that need access to cash.
According to Bloomberg News, U.S. banks are now lending out 78 cents for every dollar held in deposits, well below the mid-90 cents level considered optimal by many analysts.
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