GV,
re: Credit liquidity
Can you comment on the last paragraph that I put in BOLD. Do you think this is significant, and if so what are the implications?
Monday March 26, 12:10 pm Eastern Time
Fed says U.S. banks toughen lending, cite economy
WASHINGTON, March 26 (Reuters) - U.S. banks kept toughening their lending terms in March as the economy weakened and some top-grade loans began to deteriorate, weakening chances of loan repayment, the Federal Reserve said on Monday.
``Overall, the responses indicated that business lending conditions at banks had tightened further since early January, while demand for business loans waned,'' concluded the supplementary issue of the U.S. central bank's periodic survey of senior loan officers.
More than half of the U.S. banks said that ``a less favorable economic outlook'' was a key reason they had decided to impose more stringent standards and terms for lending.
``Interestingly, some respondents also commented in this context on the rapid deterioration in certain investment-grade credits,'' the survey said, using the bankers' term for loans that they carry on their books to top-grade corporate borrowers.
The Fed normally issues the loan officers' survey four times a year, but said in a footnote that it has authority to conduct up to six a year. The last time it issued a supplementary survey was in 1998 when a financial crisis in Asia combined with a Russian currency crisis and U.S. hedge-fund woes nearly dried up credit and lending for a period of time. |
