Why did banks stop lending

Economics Economics Questions
1

i know they create credit through loans. Even if someone did not pay the debt back, the banks can seize the collateral and sell it and they never lose.

Why would a bank stop lending when it’s not as though lending costs much?

Credit is really non-existent money waiting to created.

This is a very confusing topic.

but even if they did not get their money back, it’s not as though it’s a real loss to them. it’s just a number in a computer.

2

secured loans have collateral, and unsecured ones dont.

in the case of secured lending, on properties, if house prices fall less money is recouped from a reposession sale.

also banks can’t lend beyond their reserves, and

if people declare themselves bankrupt banks might not be able to get their loaned out funds back

3

The Fed pays banks a small sum, in effect, not to lend.