segunda-feira, março 10, 2014

Redlining in the Eurozone

Banking  and financial intermediation is a public service but sometimes it fails to serve the public.

One abusive banking practice used to be called redlining in the US, when banks would redirect all credit activities away from a given neighborhood or town plagued by high default rates, and practice other forms of financial descrimination and credit rationingSome redlined maps were drawn to meet the guidelines of official credit insurers such as the FHA, Federal Housing Administration.  

The figures for the utilization of the emergency financing provided by the ECB under the LTRO show a new form of redlining in the Eurozone.  One must question who the really needy beneficiaries of the emergency ECB  funding in the depths of the credit crunch

The Long Term Refinancing Operations (LTROs) to provide an infusion of low interest rate funding to distressed Eurozone banks, taking sovereign debt as collateral. The cheap loans are offered monthly, and are typically allotted in three months, six months and one year. But the ECB also announced a three-year LTRO in December 2011, where it loaned 489 billion to 523 banks for an exceptionally long period of three years at a rate of just 1%. In February 2012, it held a second auction, LTRO2, providing 800 euro-area banks with further 529.5 billion euros in cheap loans.

How do you say redlining in Greek? κόκκινη γραμμή  
And credit crunch ?  πιστωτική κρίση