Fed says banks eased loan terms as demand increased in 1st Quarter

April 30, 2012 by · Leave a Comment
Filed under: Industry News 

Well you already should know what I would, I’ll say it anyways.

Not sure that EASING, lending standards is the best course of action when demand increases.  That is close to what got us in our last crisis.   When we lower lending standards on home loans, guess what, demand increase for the cheaper credit.   Now I do have faith in the banks that this easing in the lending standard probably was not anywhere as drastic then the 2001-2007 time-frame but I am just saying, this logic they laid out in the article is at least different enough, that is got me to read it and write on here.

Please, bankers and risk officers everywhere, lets not repeat the same trap again.   Our recovery will be long and slow and this is a good sign of a healthy, real and sustainable recovery.   We don’t need cheap money right now.  What we need is more good ideas and businesses to invest in so we can create the jobs that we need in America.  Ok, all done.

Bloomberg: U.S. banks saw increased demand for lending in the first quarter and made loans easier to get, according to a Federal Reserve survey.

“Domestic banks generally reported having eased their lending standards and having experienced stronger demand over the past three months,” the Fed said today in Washington in its quarterly survey of senior loan officers. It said the number of banks reporting eased standards and improved demand, rather than the reverse, was “modest.”

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Lending from U.S. banks taking bailout money falls $42 billion

June 1, 2009 by · Leave a Comment
Filed under: Industry News 

As it should be, we are now in a new economic reality that no matter what stimulus or bailout is done, banks and other lending institutions are not going to lend at the same levels as before.  Before we had excessive real estate appreciation with ultra low interest rates.  In that environment, banks were mostly lending against the increased value of the property and were less looking at the borrowers ability to service the debt.

Now we are in an environment were the borrower matters and they are using the normal lending standards and that means less loans will be made which is a good thing.  The answer to our problem is not more debt but less.

News (Reuters):

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Treasury demands banks with TARP funds to report lending

January 20, 2009 by · 1 Comment
Filed under: Legal News 

Funny that is it was bad lending and reserve practices that got us in this mess and now we want the banks to resume that activity to try and start a recovery.  The problem is with job losses mounting, more debt for the average citizen is not the answer.  We need to stabilize incomes and create jobs before we start discussing a recovery.  TARP was a bad idea from the beginning when we decided to abandon the free markets right when we were in need of them the most.  Banks are doing what they should of done in the first place, lend to credit worthy borrowers.  

News:

The U.S. Treasury, under pressure to revive lending, is demanding monthly reports from the banks that received the most capital from the government’s $700 billion rescue program.

Neel Kashkari, the official who administers the Troubled Asset Relief Program, wrote to Citigroup Inc., Bank of America Corp. and 18 others on Jan. 16 seeking figures on business and consumer loans. Treasury also wanted details on purchases of mortgage-backed and asset-backed securities, according to documents obtained by Bloomberg News. Kashkari will stay for a few months after President-elect Barack Obama is sworn in today.

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