And banks are so interconnected that measures of direct lending cannot capture the full risks.
"The more we go towards direct lending, the more bureaucratic the program will become, " says ASLP Executive Director Kevin Bruns.
The fear here is that a Democratic-controlled Congress will again squeeze student lenders and attempt to ramp up competition from the direct lending program.
The HKMA will be permitted to provide direct lending to Hong Kong banks, while making it easier for banks to use the authority's overnight funding facility.
This sort of structure would provide leverage relative to traditional direct lending by EFSF in that given a relatively low probability of default, the total debt that could be insured would be larger than the total that could be lent directly.
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Nor is the shift from direct lending to auction sure to work: for all the praise heaped upon the ECB, the spread between the ECB's repo rate and euro-denominated interbank rates is no less worrying than that in America or Britain.
The hope is that by extending the maturity of central-bank money, broadening the range of collateral against which banks can borrow and shifting from direct lending to an auction, the central bankers will bring down spreads in the one- and three-month money markets.
On Tuesday, he said the Fed would consider extending its direct lending window to Wall Street companies (aka, primary dealers typically not allowed to borrow directly from the Fed) beyond a mid-September deadline to promote stability, as long as short-term debt markets continue to be severely constrained by the credit crisis.
Borrowing of this sort has been increasing much faster than direct personal lending in recent years.
Government-owned lenders now account for 28% of all direct bank lending in Japan.
The first would offer foreign banks a deal by which they create proper subsidiaries in India (which should be easier to regulate) and direct more lending to priority areas such as agriculture.
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Finally, microfinance institutions can tackle the cost of distribution for direct to farmer lending.
This week the Fed took another step in that direction: by buying commercial paper, it is now in effect lending direct to companies.
China has relied more on quantitative measures, such as direct controls on lending and changes in the amount of reserves that banks must hold at the central bank.
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And besides, foreign direct investment, bank lending and the value of the rupiah have all been abysmally low.
He insisted that more quantitative easing could still make a difference to the economy - and so, hopefully would these new, direct efforts to boost lending.
Mr. COLL: Well, it provides economic support for the Pakistan government and it provides support through the IMF and the World Bank for multilateral lending and direct grants to Pakistan.
It cannot relax its grip on lending and deposit rates and it cannot direct the banks to begin another round of lending to restart faltering growth.
But the cut will have little direct impact on the economy because lending is limited by quotas.
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Another, less direct reason: Banks in Europe are still wary of lending, or at least that's the impression consumers are getting.
Which is why in a time of panic they may well stop lending to any bank which may have a direct or indirect exposure.
But critics of the bill passed Friday are concerned that it will quash the lending industry by steering colleges in the direction of Direct Loans administered by the Department of Education instead of federally guaranteed loans, which account for about 80% federal student loans.
That sounds bad, but the banks that have lost access to direct ECB funding can almost certainly still get money from the Greek central bank, which, of course, is ultimately, getting its cash from the ECB (though unlike the more direct form of ECB liquidity support, all the risk implicit in this so-called ELA lending is, formally at least, borne by the Greeks alone).
The Fed's information-sharing agreement with the Securities and Exchange Commission is not enough, and Geithner did not believe direct regulation of hedge funds is practical, but tighter supervision of the amount of risk taken on by lending to hedge funds could help prevent excessive leverage.
Presumably, countries that attract more foreign direct investment suffer less than those that have a greater amount of footloose portfolio investment or short-term bank lending.
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