To understand why banks are lending and borrowers are calling the shots, it may be worthwhile to look at the specifics and severity of the sub-prime meltdown, Lehman’s demise and the ensuing recession. Ironically, it was the severity of the 2008 collapse and the panic it caused that have kept asset-based lending going.

The total sub-prime market in 2008 was relatively modest—less than 5 percent of the total mortgage market—Matthew Berk recalled: “So even if it all went away, that’s not all that big a deal and the economy could absorb it without too much pain. What nobody saw at the time was the value and scope of derivatives tied to the performance of that portion of the mortgage market. They were all bets on market performance with major players on each side—I’m long, you’re short, we’ll see where we stand a year from now and settle up—that were not limited to the value of the underlying securities. If at any point in that year, you’re out of the money by a certain amount, you have to put up real collateral to ensure you can pay me. Lehman went into crisis because it was overly long on the market, and when those securities started losing substantial value, Lehman didn’t have the capital to meet the collateral calls and let the market play out.”

Had the decline been more modest and the fears of depression less pronounced, intervention by the federal government, if any, probably would have been far less aggressive than it was. In the wake of Lehman’s demise, the usual political and philosophical debate followed over the proper role of government and what, if anything, it should do to bolster the ailing economy. Economists who advanced the notion of federal government intervention carried the day over the objections of their laissez-faire counterparts. The federal government intervened in a significant way, most notably with the several hundred billion-dollar Troubled Asset Relief Program (TARP), but also by backstopping AIG, whose problems were similar to Lehman’s but which was viewed as too crucial to the insurance market to fail.

One of the stated goals of the TARP program, in which the U.S. Treasury Department bought financial institutions’ assets and equity, was to keep the lending landscape as close to normal as possible—thereby encouraging banks to lend to each other, to commercial borrowers and to consumers. TARP and its related programs amounted essentially to infusions of cash, in that they obviated the need for banks to hoard money to guard against future losses tied to troubled assets. As a result, banks could remain in the lending game.

“Put one way, the federal government provided liquidity,” Holman said. “Put another, it printed money and threw a lot of it in the banks’ direction.” That left banks with huge amounts of cash and a need to lend it, if they hoped to see returns and earn money. Meanwhile, the economy has limped ahead, stabilized, but hardly robust—and exhibiting relatively insignificant growth. Businesses are generally not expanding operations or growing via acquisition; their aggregate appetite for debt is slack.