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http://www.marketwatch.com/news/story/banks-putting-squeeze-credit-fed/story.aspx?guid=%7B7BE04142%2D569B%2D4889%2DAC74%2D4F30FA124B59%7DBanks getting much stricter on loans, Fed says
By Rex Nutting, MarketWatch
Last update: 2:18 p.m. EST Feb. 4, 2008Print E-mail RSS Disable Live Quotes
WASHINGTON (MarketWatch) - Banks are putting a stranglehold on credit, the Federal Reserve reported Monday.
Banks are raising their credit standards for mortgages, consumer loans and commercial real estate loans at a pace never seen in the 17-year history of the Fed's quarterly survey of senior bank loan officers, the Fed said.
Plain-vanilla business loans were also much harder to obtain, the Fed said.
Banks expect more delinquencies and charge offs for most types of loans to consumers and businesses, the survey said. Banks said they were tightening their lending standards in response to weaker economy, reduced tolerance of risk, and decreased liquidity in secondary markets.
The survey backs up the Federal Open Market Committee's comments last week that credit conditions had tightened considerably, a factor that led to the FOMC to slash interest rates by an unprecedented 125 basis points in two weeks.
The Fed remains worried that credit is getting too tight after years of loose standards.