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The Finance Ministry pulled out a wheelbarrow filled with cash yesterday morning, NIS 6 billion to be more exact, and told the banks: Take. Divide it up among businesses. Give it to consumers. Pass it out to whoever needs it.

But the banks are eyeing the treasury, shrugging their shoulders and saying: Sorry, we don't feel like it.

The dialogue between the banking system on one side and the Finance Ministry, the Israel Securities Authority and the Bank of Israel, on the other, over the guarantees to be given to the banks in return for providing credit has been going on for two months. The treasury is worried about the collapse of public companies which will be unable to pay off their debts and drag institutional investors down with them resulting in big losses in the public's pension portfolios. Such a situation could develop into a frenzy of withdrawals from provident funds and a crisis in bond markets that would require government intervention. That is why the treasury has chosen to intervene now and allow the banks to be the ones to rescue the capital markets from all those problems, after all an ounce of prevention is better than a pound of cure.

The treasury is not interested in becoming a supplier of credit in its own right. Treasury officials do not know how to grant loans, demand guarantees, evaluate risk levels of customers and set prices for loans. The markets may be able to do all that, but in reality they are all dried up and have stopped functioning. What is to be done? Turn to the banks and ask them to do it instead.

But the bankers see the whole story in a completely different way. They are also caught up in the panic. They still have not calmed down yet from the inter-bank market for loans and deposits being paralyzed for weeks, and no bank wanted to deposit or receive funds from any other bank. They also have yet to recover from the shock of the nationalization of such successful banks as the Royal Bank of Scotland, Dexia and Fortis; and that others have collapsed. They are still amazed as they see how American banking giant Citigroup came to the brink of failure this week and needed the intervention of the U.S. government to survive.

The banks are not used to such terrifying reality, and that is why they are hunkering down in their shelters: They are giving out almost no new loans, they are raising prices with no distinction between good customers and bad customers, and they do not want anyone to force money on them in order to pass it on to customers. They are simply not in the mood to give out money at the moment. All they are interested in for now is their own survival.

While the Bank of Israel has staked out a generous monetary policy and has lowered interest rates to an unprecedented level of only 2.5%, a cut of 1.75% in a matter of only two months, and while the treasury has adopted an expansionary fiscal policy, established investment funds and put up NIS 11 billion in guarantees - the banks are heading in exactly the opposite direction.

They are increasing the gaps between the interest rates they pay and and what they charge their customers, and are hitting their customers with shady interest rates. In fact, what they are really doing is starving their own customers and choking the economy.

But most of all, what terrifies the banks is the possibility that the state's injection of capital is only the start of a process to increase government involvement in banking matters.

Today, the treasury only wants us to provide credit, say the banks, but tomorrow they will want part of our dividends, and the day after they will ask us to limit salaries. That is really what worries the banks, and that is why they are hunkering down and saying "No, thank you."