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Santelli Debate: Are Banks On the Right Track?

Are banks asphyxiating the recovery by hoarding money?

Matt McCormick, banking analyst at Bahl & Gaynor, and Rick Santelli debate the question.

McCormick says sickness in the financials industry shoulders much of the blame for a slow rebound.

"Their [banks'] past sins are what's going to have to be adjusted by the market longer. It's going to take a while for them to get out of this mess. Their past detrimental activities are what's slowing down this recovery," McCormick said.

But Santelli believes banks are simply doing the right thing: minding their businesses and safeguarding their capital.

"Even prime mortgages are starting to see rising defaults. The government waste dump is going to accept even less" of troubled assets, Santelli believes.

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Banks "should only lend to people who can pay back," he declared.

And "if the number of people and businesses that they [banks] perceive who can pay back is even smaller, they shouldn't lend."

"Isnt that Congress' job — to lend to people who can't pay back?" Santelli asked rhetorically.

Watch the video above for the full debate.

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CNBC Investment Intelligence:

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CNBC Slideshows:

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Top TARP-Recipient Bailout Banks:

AIG

Citigroup

Bank of America

JPMorgan Chase

Wells Fargo

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Disclosures:

Disclosure information was not available for McCormick.

Rick Santelli is a contributor and correspondent for CNBC.

Disclaimer