|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Bankers: We're Lending, Really, Pressured By Regulators And Lawmakers, And With Billions In New Capital In Hand, The Banks Claim They Haven't Held Back Their Commercial Lending.
Sarah Johnson
CFO.com. November 18, 2008
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EXCERPT: Bank trade-group representatives insisted in congressional testimony today that financial institutions haven't tightened their lending to business clients. Rather, those customers have decreased their demand for financing, they said. Banks have increased their commercial lending by 15 percent this year, Edward Yingling, president and CEO of the American Bankers Association, told the House Committee on Financial Services. His testimony came after lawmakers grilled Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke this morning on the changing direction of the government's $700-billion bailout plan and its promise of freeing up capital for businesses and consumers. Moreover, Yingling said, citing National Federation of Independent Businesses data, only 6 percent of small businesses say they have had trouble borrowing money. Steve Bartlett, Yingling's counterpart at the Financial Services Roundtable, similarly claimed that lenders are extending credit, and, in fact, have upped their level of financing this year. "As credit markets continue to unfreeze," he said, "our members will continue to lend to qualified buyers." Still, Bernanke said that "overall, credit conditions are still far from normal, with risk spreads remaining very elevated and banks reporting that they continued to tighten lending standards through October." Companies with low ratings have not been issuing bonds, he added. Last week, Bernanke, Paulson, and the Federal Deposit Insurance Corp. urged banks to lend to "creditworthy borrowers" in an unusual joint statement. The letter did not mention any repercussions for financial institutions that didn't make do on that request; however, Barney Frank, chairman of the House Financial Services committee, asked the regulators to enforce it. The letter "would be even better if someone gets whacked for not following it," he said. "There's got to be some teeth." |
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