The most recent Senior Loan Officer Opinion Survey suggests that American banks are still tightening their lending standards and will continue to do so through the end of the year. Even when loans stop going bad, therefore, the economy won’t suddenly bounce back. It will also be harder for Bank of America (BAC), Wachovia (WB), and other banks to grow at the rates that their investors have long since gotten used to.
Asha Bangalore of Northern Trust:
The details of the survey show that the housing market, which was the trigger for the current financial market crisis, is unlikely to stage a rebound in the near term. Almost 80% of respondents (78.7%) indicated that they have tightened mortgage underwriting standards, up from nearly 68.7% in the April 2008 survey.
Asha also notes that banks are tightening standards for more than mortgages: credit card and businesses are also feeling the squeeze:
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