In these tough times a lot of banks are giving out loans that probably should not be given out. The loans are sometimes to people who cannot pay them back, much less add interest on to that.
According to Amid Debt Crisis, Banks Confronted by Familiar Problems an article in the New York Times, “European financial institutions, for example, are currently trying to offload more than 2.5 trillion Euros ($3.1 trillion) of noncore loans, or roughly 6 percent of total European banking assets. According to the accounting firm PricewaterhouseCoopers.”
Most banks need the central bank funding to help with the economic growth. Many banks in Europe were too dependent on these funds and as a result struggled to raise the proper funds.
Banks need to regulate who they give a loan out to and not just give it out too anyone in order to get their money back.NY Times: Amid Debt Crisis, Banks Confronted by Familiar Problems
http://dealbook.nytimes.com/2012/06/24/amid-debt-crisis-banks-confronted-by-familiar-problems/
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