U.S. Banks Tightening Lending Requirements in 2008

Washington, D.C.–In the early months of 2008, U.S. banks greatly restricted their lending practices, according to a Federal Reserve report released Monday. The amount of banks with tighter lending requirements for corporate, commercial real estate, home mortgage, credit card and other consumer loans was “close to or above historical highs for nearly all loan categories,” the senior loan officer survey said.The survey showed that banks are continuing to restrict credit–especially in regard to consumer and commercial/industrial loans, the Financial Times reports. The number of banks restricting credit card and other consumer loan terms hit a new high. Student loan lending also appeared to be harder to obtain.Home mortgage lending also declined. Roughly 62 percent said they restricted standards on prime loans; 76 percent tightened up “non-traditional” loan standards. The survey, which measures activity from January to March, was conducted in April.Roughly 55 percent of domestic U.S. banks said they had restricted their standards for granting loans to large- and mid-sized companies. Sixty percent raised the price for credit lines.Ninety-four percent of banks said they had restricted lending standards on business loans because of the hazy future of the U.S. economy; 74 percent pointed to specific industry fears.