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The latest installment of the Senior Loan Officer Opinion Survey, has some observers worried....

The latest installment of the Senior Loan Officer Opinion Survey, has some observers worried. Citing "increased competition," banks generally reported easing their lending standards on business loans over the last three months, as razor thin margins have created a scramble for C&I business (previous). Concurrently, the amount of business loans extended rose 10% Y/Y to $1.55T, leading some to question whether the combination of more lending and lax underwriting standards might prove hazardous to the system. Competition "creates the temptation to do silly things," M&T vice-chairman Mike Pinto tells FT.
Comments (3)
  • No, when the Fed credits the banks' accounts electronically, and then the banks, who get the money with no effort involved whatsoever, use it to loan out to their customers, that creates the temptation to do silly things.

     

    What ever happened to having the banks earn customers deposits by paying a respectable interest rate in the free market, and then using customers deposits to loan out to borrowers? Remember how banks were suppose to operate?
    19 May 2013, 10:23 PM Reply Like
  • Whatever happened to dropping money from helicopters?
    19 May 2013, 10:37 PM Reply Like
  • Typical business cycles cured excesses every 3 to 5 years. Now with everyone pumping the economy for as long as possible the excesses have turned into blowouts.
    20 May 2013, 12:01 AM Reply Like
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