The credit crunch is easing in the U.S. but it's far from over.
Banks loosened their lending standards in the third quarter, but loans remained hard to get by recent historical standards, a trend expected to continue for the foreseeable future, according to the Federal Reserve's senior loan officer survey, released Monday.
The survey—based on responses from 57 domestic banks and 22 U.S. branches of foreign banks—showed banks for the second quarter in a row eased standards on business loans to firms of all sizes.
But the picture for households is more mixed. Banks have tightened standards on prime mortgage and home-equity loans but have become more willing to make consumer installment loans, such as car loans.
Some lenders are also easing standards for approving credit cards. However, other banks cut the size of credit lines on existing credit card accounts.
"We sort of had to figure out where the new normal was," said Robin Paterson, executive vice president and chief credit officer at American Business Bank in Los Angeles. "Once you know what that is, credit loosens up for certain types of [borrowers], but tightens up for others."
Most respondents cited the improving economy and increased competition from other lenders as reasons for relaxing loan standards to businesses. The previous survey, covering the second quarter, found that big U.S. banks had started to ease terms on loans to small businesses for the first time since late 2006.
Tuesday, November 9, 2010
Fed Releases Senior Loan Officer Survey
From the WSJ: