Bankers Tighten Credit Card, Loan Standards
Vincent Del Giudice Bloomberg Business News, THE JOURNAL RECORD
WASHINGTON -- U.S. bankers tightened standards for credit cards and other consumer loans over the past three months as they braced for an increase in delinquencies, the Federal Reserve said today.
In addition, bankers' willingness to extend loans to consumers declined, on balance, for the first time since the 1991 recession, the Fed said.
"The banks attributed their concern about future delinquencies to increased household debt burdens and to a greater willingness of households to declare bankruptcy," the Fed said.
The Fed's findings -- based on a periodic survey of senior loan officers at 78 domestic banks and foreign institutions with U.S. operations -- follow industry reports of an increase in late loan payments.
Outstanding consumer installment debt has increased steadily over the past three years, crossing the $1 trillion mark late last year.
Analysts warn many households may be overextended, especially since many lenders aggressively solicited credit card business through the mail.
"Some people are struggling under their debt loads," said Paul Kasriel, an economist at Northern Trust Co. …