Sun, 19 Sep 2021

Loosened lending by banks helped economy, says Fed

Robert Besser
06 Aug 2021, 11:28 GMT+10

WASHINGTON D.C.: Loan officials in banks in the United States cited loosening of criteria and conditions on loans for businesses during the April-June period, amid the economic revival owing to broader resumption of activities and increases in inoculations against COVID-19.

Citing the survey conducted by the Federal Reserve Bank, made available on August 2, the loan officials additionally drew attention to higher requests for commercial loans from small-, mid-, and large-sized companies.

"Major net shares of banks ... cited a more favorable or less uncertain economic outlook, more aggressive competition from other banks on nonbank lenders, and improvements in industry-specific problems as important reasons," the Federal Reserve System noted in the bank's quarter-wise survey.

According to information from the Department of Commerce on July 29, the American economy recorded a 6.5 percent annual growth rate during the last quarter, propelling the GDP above its pre-COVID-19 peak.

An easing of consumer lending standards was observed on consumer, credit card, and auto loans by banks, with the demand strengthening for these in the corresponding period.

The Federal Reserve's loan officer survey covered 75 domestic banks, as well as 22 foreign branch and agency offices in the United States.

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