WASHINGTON - The Federal Reserve reports that more banks are tightening lending standards on home mortgages, consumer loans, and business loans in response to a spreading credit crisis. The Fed said the percentage of banks reporting tighter lending standards was near historic highs for nearly all loan categories.
The survey, conducted in April, found that nearly two-thirds of banks surveyed had tightened lending standards on traditional home mortgages with 15% saying those standards had been tightened considerably. The survey also found that the tougher lending standards extend far beyond home mortgages to other types of consumer debt such as credit cards and home equity lines of credit.
The survey found that only nine banks are currently making loans in the subprime category and of that group, 785 had tightened lending standards either considerably or somewhat. About 55% of banks reported imposing tougher standards on business loans, up from about 30% in the previous survey in January, the Fed reported.
The Fed has been pumping billions of dollars into the banking system in an effort to encourage banks to keep lending to guard against the threat that the tighter credit could push the country into a deep recession.
