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Report: Fewer Banks Easing Lending Standards
Posted By RVBusiness On November 7, 2011 @ 4:31 pm In Breaking News | No Comments
Fewer banks eased standards on loans to businesses in the third quarter, and lenders tightened standards on credit to European banks and their affiliates, according to a Federal Reserve survey.
Bloomberg reported that banks were slightly more likely to ease than tighten their standards on credit, “in contrast to more widespread reports of such easing in previous quarters,” the central bank said today in its quarterly survey of senior loan officers. Banks that raised their standards “cited a less favorable or more uncertain economic outlook as a reason for the tightening.”
Fed Chairman Ben S. Bernanke and his colleagues on the Federal Open Market Committee are struggling to boost an economy so weak that unemployment has been near 9 percent or higher for 31 consecutive months. In a press conference last week, Bernanke said the expansion is hampered by “still-tight credit conditions” for many households and small businesses and that “monetary policy has been blunted” by the dysfunctional mortgage market.
In a special set of questions on lending to firms with European exposure, about half of U.S. banks said they made loans or extended credit lines to European counterparts. About two- thirds of all banks that made loans to European banks tightened their standards, and many “indicated that the tightening was considerable.”
U.S. economic growth quickened in the third quarter to a 2.5 percent annual rate after a 0.4 percent pace in the first quarter and 1.3 percent in the second. Employers added 80,000 employees to their payrolls in October, and the unemployment rate dipped to 9 percent.
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