Why Aren't Banks Lending?

The lending excesses of 2005-07 directly impact current economic conditions in two ways. First, because the excesses of the period helped to contribute to the global financial crisis, today’s unemployment rate is partly a reflection of the dislocation caused by the credit losses attributable to bad lending. Secondly, the excesses of the period have made credit less available for high-quality borrowers today by increasing the regulatory scrutiny applied to prospective loans.