AEI on Government Credit Policies

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From the article:

• Without proper checks and balances, governments invariably choose to use their financial systems to carry out social and political goals, often financed through private banks, off the government budget.
• This practice can push resources out of the financial sector, reducing business and consumer access to credit and limiting economic growth.
• Eventually, government-directed lending programs end up costing taxpayers dearly, as loans made to satisfy political goals rarely make economic sense without an explicit government subsidy somewhere in their life cycle.
• Armed with new authorities from the Dodd-Frank Act, and fortified by public hostility toward bankers, US bank regulators are increasingly using their new powers to direct lending.

Source: Paul H. Kupiec, “When Governments Direct Bank Credit, the Economy Suffers,” AEI Outlook Report, March 4, 2014