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Interbank lending stopped because the FED capped the rates at which banks could charge each other for overnight interbank lending. There is always a rate (price) where the market can clear. Shortage is always the result of price control. You sound like someone working in the banking industry, yet completely lacking in understanding what a bank is supposed to do in a free market place: it is not a reseller of government agency loans or branch office of the FED. It's supposed to take risks with its own capital. Government banking regulations have stymied the proper role of banks, and turned banks into little more than public utility company customer windows . . . or in essence the windows and desks at the DMV and the post office.
posted by 76.118.39...
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