Fed: Bankers Clamp Down On Lending

By Douglas A. McIntyre Updated May 3, 10:16PM EDT · Published May 3, 2:56PM EDT

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It is no wonder that small business and consumers are not as active as they would need to be to support a meaningful improvement in US GDP. The Federal Reserve survey of senior bank loan officers, conducted during April, indicates that financial firms have made credit more scarce in many cases, in the first quarter.

The data is based on responses from 56 domestic banks and 23 US branches and agencies of foreign banks.

The Fed reported:

The April survey indicated that most banks kept their lending standards unchanged in the first quarter, but that moderate net fractions of banks further tightened many terms on loans to businesses and households.

The Commerce Department said consumer spending and personal income increased in March. But personal savings fell by a very modest amount – which means Americans dipped into their savings to shop. Without access to capital, however, the improvement in consumer activity cannot continue.

It’s clear the spending was limited by the caution exhibited by businesses and consumers, no matter what the Commerce Department data shows. “The survey also indicated that loan demand generally weakened further,” the Fed reported.

The data also shows that it was the large banks – not the regional and community banks – that helped the market’s liquidity, a sign that the balance sheet of the largest firms have recovered. Meanwhile, smaller banks are still saddled with onerous residential loans and commercial mortgages.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.