Banks don’t lend to hold, they lend to sell. Bush and Paulson propped up the Wall Street banks as if they would start lending to people and then hold the debt. But that’s not the business today’s banks want to be in. Banks want to originate loans, bundle them up, and sell the loans leaving the banks will little to no risk. 

The part of lending that has become very expensive is lending to people that are at all credit risks or buying up bundled loans that are at all risky. That’s the problem.

It’s not clear how Tim “I can’t do my own taxes, but I can both diagnose and fix the financial system” Geithner will create enough trust that people will be willing to lend money to anyone or any enterprise that has much risk.