One of the biggest handicaps for our economy following the recession was that the credit markets completely froze up. Having been burned so much by bad lending decisions, banks decided that they weren't going to extend that kind of credit any longer. Credit expands the money supply and grows the economy, so without banks performing their natural function, it created another roadblock for the recovery to get past.
But we finally seem to be getting beyond that. According to the research firm SNL Financial, commercial and industrial loans were up 16 percent in 2012. The number was up by 4.4 percent in the fourth quarter of 2012, and total amount of business loans has now increased for nine quarters in a row.
Part of what's fueling that activity is that banks are flush with cash. With investors still spooked by the 2008-09 market crash, banks have seen an increase in deposits of 29 percent since 2008, to a current total of $9.06 trillion.
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