Banks must keep lending in proportion to shrinking capital base
The ongoing fall in bank capital as the housing boom turns to bust is already forcing banks to cut back their outstanding loans significantly, because they must keep the lending in proportion to their now-shrunken capital base.
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
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Potential consequences of the financial crisis? »Potential consequences of the financial crisis?
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US faces severe recession »US faces severe recession
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Sharp decline in consumer spending »Sharp decline in consumer spending
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Sharp decline in consumer lending »Sharp decline in consumer lending
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Banks must keep lending in proportion to shrinking capital base
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