U.S. banks report tougher credit standards in wake of failures - BNN Bloomberg

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A U.S. Federal Reserve report Monday showed that banks raised their lending standards for business and consumer loans in the aftermath of three large bank failures and expect to lift them more this year.

The report, known as the senior loan officers survey, asked banks if they have tightened their lending standards by taking steps such as demanding higher credit scores, charging higher interest rates, or requiring more collateral, among other steps, that altogether would make it harder for businesses and consumers to obtain loans.

Federal Reserve officials and economists will closely scrutinize the report, because tighter credit standards are expected to be followed by a reduction in lending. That could force businesses to pull back on expansion plans and reduce hiring, and could limit sales of cars and homes. The survey respondents were 65 U.S. banks and U.S. branches of 19 foreign banks. The results were gathered from March 27 to April 7, well after Silicon Valley Bank and Signature Bank collapsed in early March, touching off the latest round of bank turmoil. First Republic bank failed a week ago, the second-largest bank failure in U.S. history.

 

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