Now, of course, most banks use their own deposits to finance loans.

Sir James said that, in the current economic climate, it would be hard for banks to finance loans.

Banks are now using very expensive overnight money to finance long-term loans.

Instead, it will finance loans directly, but only if borrowers can meet much tougher standards.

So why did Freddie help to finance loans that look wildly irresponsible now?

Borrowing for longer terms - to finance mortgages or industrial loans - remains problematic.

He bought a portfolio of loans, financed by the bank he was already in debt to.

Carey said he financed all the investments though savings, loans from relatives, and his $1.9 million inheritance.

To address the backlog, the state set aside $95 million last November to finance loans for dam repair.

But the institution, which depends on a strong credit rating and timely repayments to finance new loans, could also face serious problems.