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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (97266)	5/5/2009 10:31:46 PM
From: dave9	of 116555

Bankers’ Worry: Worst Is Yet To Come By David Wessel. The Wall Street Journal. New loans may be profitable, given how cheaply banks can borrow today. But many banks are still worrying about whether they’ll get paid back on old loans. The latest Federal Reserve survey of senior loan officers finds very few shoots of green in that garden. The Fed asked senior loan officers: What is your bank’s outlook for delinquencies and charge-offs on existing loans of various sorts in 2009, assuming that “economic activity progresses in line with consensus forecasts?” Short answer: Gloomy. Or as the Fed put it: “A significant majority of banks reported that credit quality for all types of loans is likely to deteriorate over the year” — and that’s assuming the economy doesn’t take another turn for the worse. The specifics: * Commercial and industrial loans: Of 52 banks responding, none said they expect improving quality, but seven said they expect delinquencies and charge offs to stabilize at current levels. * Commercial real-estate loans: Only 1 of 51 banks (the other doesn’t make such loans) sees improving quality, and three see quality stabilizing at current levels. Of the 47 who see a worsening picture, 13 expected a substantial deterioration in 2009. * Prime residential mortgages: Only 1 of 50 banks sees improving quality, and seven see quality stabilizing at current levels. * Subprime mortgages: No bank sees improving quality, and only two see quality stabilizing at current levels. * Home equity lines: No bank sees improving quality, though nine expect quality to stabilize around current levels. * Credit card loans: None of the 31 banks who make such loans expects improvement, and three expect stabilization. * Other consumer loans: Only 1 of 50 banks expects improvement, though 12 see loan quality stabilizing around current levels blogs.wsj.com My highlights. No. None. Only 1 of 50 banks sees improving conditions. That bank, the 1 of 50, needs to drug test their senior loan office. It looks like the rally is about over. This is a good search google.com

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