The Financial Community Reinvestment Act

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Much as it pains us to point out that it was government pressured lending that got us here in the first place, it was government pressured lending that got us here in the first place. Having absorbed exactly zero from the last bubble's explosion...

President Barack Obama will require banks to boost lending to consumers and companies in return for taxpayer aid from the $700 billion bailout fund, in a departure from Bush administration policy, a key lawmaker said.
"You're going to see the Obama administration," learning lessons from the first phase of the program, "push for much more lending," House Financial Services Committee Chairman Barney Frank, who helped write the financial-rescue law, said yesterday on ABC television's This Week program. "There are going to be some real rules in there."

If there is a formula to load the balance sheets of institutions with more bad loans, this probably looks a lot like it.
We can't really say we want to see banks doing all that much lending at the moment. Debting our way out of the current crisis is simply not a solution. It merely delays the problem, and pays it back later- with interest.
The United States enjoyed an eye-popping period of largely artificial growth the last two or three years (if not the last five), and one thing that never seems to sink in is that many of these "losses" are merely the evaporation of as much mist under the harsh sunlight of reality. This is a short way of saying that there is no escape from the pain but to endure the pain for awhile- you never had those assets anyhow, unless you sold them for cash. They were an illusion. Your only way to capitalize on them was to unload them on a greater fool before the sun came up. If you missed the boat, that's too bad but those are the breaks.
Certainly, the present administration is under a lot of pressure to produce "results" and press the magic button under the President's desk to make everything all-better. This is a self-inflicted wound, since they got themselves elected by setting expectations high. Very high. Unfortunately, it doesn't work that way, and until someone points out that more debt (particularly that issued by decree) is not exactly an answer, we are all in a lot of trouble.
Obama to Require Banks Receiving Aid to Boost Lending [Bloomberg]

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