The Banks Say It's Not Their Fault Anymore -- No One (Except The Government) Wants To Borrow Money

The Federal Reserve’s quarterly loan officer’s survey makes two interesting points:

  • Banks have, in large part, finally stopped tightening their lending standards

BUT

  • Demand for loans is still falling

That makes sense, given weak consumer spending and the huge debt mountain we need to work off.  But it won’t improve the economy anytime soon.

See the charts >

After tightening lending standards for more than two years, banks are finally starting to loosen up, especially for lending to big companies. Here, Commercial and Industrial loans...

Same trend for Consumer loans (credit cards, auto loans, etc.), though here banks are still tightening

More banks are even willing to make Consumer instalment loans again (buy now, pay later!)

The trend for Commercial Real Estate loans is also improving, but here banks are still tightening

Same for residential mortgage loans (subprime is still tight)

Lastly, loan pricing trends are finally moving toward neutral. They're not getting cheaper yet, but they will be soon.

Alas, demand for all these loans is still falling. First, Commercial and Industrial loans...

Consumer loans...

Commercial Real Estate loans

And mortgage loans

So, as the banks tell it, you shouldn't be blaming them for the crappy economy anymore. You should be annoyed at your neighbours for not borrowing more money.

Except there's also this debt mountain we have to work off. So maybe your neighbours aren't being so stupid, after all.

Source: Ned Davis Research

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