Lending to consumers has dropped as banks move quickly to further tighten credit standards after the failure of SVB, Fed survey says
A credit crunch appears to be forming in the southwest region of the US economy, with the Dallas Fed's survey conducted after last month's two US bank failures showing lending to consumers has dropped, and credit standards elevated.
An index tracking overall loan volume fell to -18.3 in the survey conducted March 21 through 29 to which 71 financial institutions responded. The index was at 4.8 in February. The largest drop among loan types was in consumer loans, as that index fell to -33.4 from -17.8. Lenders generally have been making access to loans more difficult since the Federal Reserve began raising interest rates last year.
A"crisis of confidence in our banking system" was created by the bank failures, the buyout of troubled lender Credit Suisse by UBS, and downgrades of several regional banks, one unnamed survey respondent told the Dallas Fed."The additional macro impact of interest rate hikes has put the economy in a hard-landing recession, in my opinion," they said.
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