How not to solve a credit crunch

The ECB started a bank lending program that totaled $644 billion for three year money at 1% rates The loans went to 523 banks, but there were some large banks who said no thanks. The LTRO (Long-term Refinancing Operations) may seem like a success, but there is now some rethinking of what being a borrower from the central bank means. Banks should expect more interference from regulators if they borrow more money. Also, there will be a stigma with those that take the money as institutions that actually need the money. This may have been the case with the first round of the LTRO, but the second round seems to suggest banks are willing to get as much cheap money as possible.

This is type of ending arrangement puts money in the pockets of banks but may not translate to end user lending if the institutions are over-regulated.