2008 Industry News

More Banks are Tightening Loan Policy
Posted: 8-21-2008
The Fed survey of senior loan officers that was conducted for the period April to July 2008 indicated that more banks are increasing their loan requirements. The Federal Reserve polls senior lending officers at 54 domestic banks 4 times a year. Approximately 60% of the banks polled expected to tighten their loan policy well into the first half of 2009. While the latest tightening occurred in credit cards and consumer lending, it also revealed that banks are growing more restrictive in their lending policies for mortgages and business loans. Two Thirds of the banks said that their loan requirements for small businesses are up from about half that number in the April survey. In addition banks are increasing their spread between loan rates and their cost of funds making borrowing more expensive. It is becoming more difficult for small businesses to obtain the loans that they need.