There have been quite a few anecdotes about a new tough-mindedness among banks, and it is finally showing up in the data. From the New York Times:
Two vital forms of credit used by companies — commercial and industrial loans from banks, and short-term “commercial paper” not backed by collateral — collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001….“The second half of the year is shot,” said Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., who was until recently optimistic that the economy would continue expanding. “Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit.”…
But if the newfound caution of American banks is prudent in the long run, the immediate impact is amplifying the troubles with the economy. The Federal Reserve has been lowering interest rates aggressively to make money flow more loosely and to spur economic activity.
The financial system is not going along: As banks hold on to their dollars, mortgage rates are climbing. So are borrowing costs for corporations.
Some suggest that the banks, spooked by enormous losses, have replaced a disastrously indiscriminate willingness to hand out money with an equally arbitrary aversion to lend — even on industries that continue to grow.
The Times seems perplexed with this pattern, which is odd. This is perfectly standard bank behavior when credit losses start to pile up. Just as they were overly lax in the boom times, they become overly stringent in the downturn. And the new stinginess can show up in rates, credit availability,or both. In the dot-bomb era, which was a mild tightening from a credit perspective, rates stayed favorable but loans become more difficult to obtain.
Flanders 
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The Federal Reserve has been lowering interest rates aggressively to make money flow more loosely and to spur economic activity.
Ah, I vaguely remember the days when the Fed changed interest rates. Sometimes they would move up, and sometimes they would move down. We’d play silly games with a “bias”. It was good, clean fun.
Then the liquidity trap hit. Now we get “liquidity injections,” bizarre regulations and insane legislation, with discount windows for all.
Push a little harder on that string, boys! It’ll move any… moment… now!