What credit crunch? Oh THAT credit crunch.
Until today, I have pretty much ignored the sub-prime lending "crisis." I felt it was the ultimate product of a love triangle between greedy real estate professionals who helped push up valuations, greedy bankers who were more than happy to give loans to people living above their means, and people agreeing to purchase houses they simply could not afford (and at horrible terms).
Largely, I have ignored the bitching and moaning about the perceived credit crunch. After all, just this week I have received a total of six credit card solicitations, and three of those were for corporate credit cards. I still see advertisements for 0% APR car loans. Obviously, credit is available to those of us who have protected our credit score by paying our bills on time.
Besides, the Fed (which is run by private banks) is addressing the problem by bailing out the banks. So far it reduced interest rates, and is now creating a bailout program for banks, err... I mean distressed homeowners (but only the ones who are current on their payments and below a certain means threshold).
However, today the Fed did something (with other central banks) which totally stunned me-- announcing the anonymous auction of $20 billion in loans (with two more planned in January). Banks already have a way to borrow money from the Fed via the discount window (at 4.75 percent), but banks that do are seen as in financial difficulty.
The real "credit crunch" happening at the banks. Understandably, banks are wary of loaning money to other banks. This is where the Fed is stepping in, by allowing banks to anonymously barrow money at a discount, with looser collateral requirements.
