Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"This is something that always occurs during a recession. And during a recession, when the economy and investments are performing poorly, lenders become more cautious. Stands to reason. This means they are going to lend money but only if they lend to what they consider to be very credit-worthy borrowers. So what lenders do is they increase the standards for lending. For example, for consumers that means you might have to have a higher credit score, you might have to have a better asset-debt ratio, and you might, for example, if you are buying a house, have to put down a bigger down payment. Now what are the banks doing with the money they are not lending out? Well they are essentially putting it in a mattress. They are actually investing it in safe investments like treasury securities. Now by paying banks for their bad loans, the idea is that this credit rescue is going to give banks a motivation to lighten up on their standards, which will lead to more loans, more spending and hopefully a shorter recession. We'll see if it works."