Interview with Robert Steel, the Undersecretary of Domestic Finance

CNBC this morning had an interview with Robert Steel to discuss the credit crunch. Robert stated that “That we’ve been through a period of pricing and readjustment, and the good news is that there are signs of improvement.” Examples of these improvements are the first of the leveraged loans getting sold, and an over all strong world economy.

When asked about commercial paper Robert said “There’s no question that commercial paper is getting better” and that it’s “still not back acting just as we wish.” The issue that we have been having with commercial loans is that 300 to 350 billion dollars of liquidity has disappeared. Some of this liquidity has gone back onto the balance sheet of financing institutions as they’re not willing to invest it out to borrowers. In other cases private investors have decided to just keep their own cash and not invest in commercial paper. Many of the riskier commercial loans are financed by investors that get high interest rate returns. Robert also states that “I would be optimistic to say that we’re passed the shrinking and starting to see things improve.”