So who needs banks anymore?

So who needs banks anymore?

Seriously, banks aren't lending cash, they're hoarding it. (Just ask any real estate developer. Banks already own too much real estate to bother with anyone who's going to build more.) And one view of the spread between the highest and lowest rates banks charge each other (LIBOR) as of this morning is the highest it's been in a long time (http://tinyurl.com/oefcdm), which means that certain banks don't trust others. Moreover, corporations are just bypassing banks altogether by issuing their own debt securities directly to other institiutions that have money and are willing to lend it. Even the Fed is getting in on that game by purchasing these securities.

So we have this huge thing called the internet and some are already using it to do the heavy lifting that the banks don't want to do. For example, microlending is certainly changing the way poor and rural people in foreign countries can now fund small businesses. And Virgin Money (another brainchild of Richard Branson) has set out to let borrowers craft their own private lenders - from those who know them best: friends, family and neighbors. In fact, that's exactly how banks became banks in the first place! They lent to family, friends and neighbors - because they knew them best.