Banks told the Fed they had tightened lending standards on commercial and industrial loans for a variety of reasons, including a more uncertain or a less favorable economic outlook and a reduced tolerance for risk. A significant number also cited decreased liquidity in the secondary market for such loans and less aggressive competition from other banks or nonbank lenders.
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US banks are tightening lending standards, raising the risk of a recession
“The tightening in standards by senior loan officers goes part-and-parcel with significantly higher rates and a shrinking balance sheet by the Fed,” said Joseph Lavorgna, chief US economist for SMBC Nikko Securities America Inc. “They’re basically self-reinforcing.”
