Being cautious about lending not bad thing

The main reason that the nation's banks got into so much trouble during this economic downturn - and, in fact, were a main contributor to it - is that they practiced unwise lending policies that gave loans to people and businesses that had questionable ability to repay them.

It is therefore odd to hear President Obama trying to browbeat the banks into seemingly doing the same thing once again.

The Obama administration feels banks, some of which received government bailout money earlier this year, are being too conservative in their lending policies and refusing to give loans to small businesses or to renegotiate home loans for those facing foreclosures.

The White House feels these loans are vital to jump-start an economic recovery.

The president used forceful language in recent days to make his point, referring to "fat cat bankers" who needed to "take a third and a fourth look" at requests for loans from small businesses, partly because they owed it to the taxpayers who had bailed them out.

These days it doesn't take much to get Americans to dislike banks whether it is because of the unpopular government bailouts or their high credit card interest rates, but criticizing them for being cautious about lending sends the wrong message.

The reality is that it was the government's encouragement of loose lending practices, especially to poor risks in the housing market, which helped put us where we are now. We do not need a return to that approach.

It seems to us that it is a good thing that banks are now more risk adverse, even if it results in a slower recovery. That is, after all, what has helped enable some of the larger banks to repay their bailout money - with interest - to the taxpayers.

It is far better for them to be cautious than for them to come to the taxpayers again with their hands out for another bailout.