Fed's Duke: Bank lending attitudes may be shifting

WASHINGTON Fri Feb 26, 2010 1:23am IST

Federal Reserve Board Governor Elizabeth Duke on Capitol Hill in Washington, September 17, 2008. U.S. banks appear to be warming to lending to small businesses even though credit remains abnormally tight, a top Federal Reserve official said. REUTERS/Larry Downing/Files

Federal Reserve Board Governor Elizabeth Duke on Capitol Hill in Washington, September 17, 2008. U.S. banks appear to be warming to lending to small businesses even though credit remains abnormally tight, a top Federal Reserve official said.

Credit: Reuters/Larry Downing/Files

Related Topics

WASHINGTON (Reuters) - U.S. banks appear to be warming to lending to small businesses even though credit remains abnormally tight, a top Federal Reserve official said.

"Bank attitudes toward lending, including small business lending, may be shifting," Fed Governor Elizabeth Duke said in remarks prepared for delivery to a congressional committee on Friday.

Her remarks were posted on the committee's Website on Thursday.

Duke said the Fed's latest survey of senior loan officers showed that bank tightening of credit standards for small business loans appeared to be nearing an end.

"There is also some tentative, anecdotal evidence that many bankers may be devoting considerably more energy toward extending new loans in 2010, as contrasted with their overwhelming preoccupation in 2009 with collecting on or writing down loans already on their books," she said.

Duke, who was a community banker before joining the Fed's board in 2008, said the turnaround in bank attitudes would likely be gradual. High unemployment is likely to constrain consumer spending and hinder business confidence, she said.

"Improvement in a number of the conditions that depressed lending in 2009 ... lead me to be somewhat optimistic that we may begin to see an increase in bank loans later this year," she said.

Small businesses normally account for the bulk of new jobs in the United States, but they have been hit hard by the recession and credit contraction. That has contributed to the 9.7 percent jobless rate.

President Barack Obama has proposed a series of measures aimed at getting credit flowing to small businesses as a means of boosting hiring. However, Duke pointed out that demand for loans was weak as companies worry about weak sales.

She pointed to surveys from the National Federation of Independent Businesses, which have shown that only a small fraction of companies listed financing conditions as their top concern, while about one third listed sales.

(Editing by James Dalgleish)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage