Fed survey reveals tightening lending standards, weak demand

The Federal Reserve’s second-quarter senior loan officer opinion survey (SLOOS) revealed banks tightened standards and saw weaker demand for loans to consumers as the coronavirus pandemic continued.

“Banks tightened lending standards broadly in the second quarter,” said NAFCU Chief Economist and Vice President of Research Curt Long. “The Federal Reserve is estimating that consumer loans outstanding at commercial banks shrunk by an annualized 17 percent in the second quarter.

“Given how much banks are curtailing credit provision, the NCUA should provide credit unions with more capital relief, which will allow them to step into the gap created by bank retrenchment,” Long added.

During the second quarter, major net shares of banks reported tightened standards and a drop in demand for commercial and industrial loans from firms of all sizes, and across all three major commercial real estate loan categories.

 

continue reading »

More News