Banks call loans early to try and boost cash reserves.
September 30, 2008

Banks have been calling loans early, at the first 31 days late moment, to try and flip and cash out their equity. Despite the fact that this leads to losses in the long term it boosts the cash reserves. Rather than waiting 15-30 years as the borrower pays back the loan and interest they are calling in the loans at the first sign of trouble and selling the properties at a loss. Because it adds more cash (an at loss sale at 50 cents on the dollar is still more cash than one months payment or many months payments for that matter.)

This is why Congress needs to help the small businesses that are in trouble. Not rely on the big banks to do so.