From Bloomberg:”Major U.S. banks shaved about $21 billion from their tax bills last year — almost double the IRS’s annual budget — as the industry benefited more than many others from the Republican tax overhaul.
“By year-end, most of the nation’s largest lenders met or exceeded their initial predictions for tax savings. On average, the banks saw their effective tax rates fall below 19 percent from the roughly 28 percent they paid in 2016. And while the breaks set off a gusher of payouts to shareholders, firms cut thousands of jobs and saw their lending growth slow.”
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Tsk! “saw their lending growth slow”, not “loaned less”. Though that likely has a lot more to do with an inadequate supply of potential borrowers who were good credit risks.
But in context, there’s a canard going around that the economy is being hurt in various ways because people or businesses can’t borrow enough money. (This shows up in “To Take Back the Map, Democrats Need a Plan to Revive Heartland Cities”.) I’ve been reading the business press for a couple of decades and there’s a decided lack of stories about businesses that have to work really hard to borrow money, but once they do, the profits come rolling in. But there are always stories about lenders pouring money into one thing or another and then losing billions, if not trillions. As a friend told me in the 1980s, anyone with a plausible business plan can borrow as much money as they need.
An aspect of this is to note that banks are “merchants” not “guardians” (to use the categories of Jane Jacobs’ “Strategies of Survival”). People seem to expect that banks will behave so as to provide for the prosperity of society as a whole. But, always and at all times, banks are *businesses* that are trying to make a profit, not provide a service to society.
If you want to criticize banks, you’ve got to sit down and decide whether what you are really asking for is for banks to become “guardians”. If you decide that you are OK with them being “merchants”, you’ve got to accept that they do things that aren’t (at least individually and in the short run) aimed at benefiting society the most.
Conversely, there are a few banks that have operated as guardians as much as merchants. The Bank of England comes to mind, as does Amsterdam Wisselbank.