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US Banks Tighten Lending Standards, Raising Risk of Recession

Nov. 21, 2022, 2:38 PM

The Federal Reserve isn’t the only one tightening credit. Commercial banks are too.

And that spells trouble for the US economy.

The proportion of US banks tightening terms on loans for medium and large businesses and for commercial real estate rose last quarter to levels usually seen during recessions, according to a Fed survey of lending officers released earlier this month.

Lending standards for credit cards and other consumer loans also became more restrictive, as the Fed raised interest rates and the economic outlook darkened.

“The tightening in standards by senior loan officers goes part-and-parcel with significantly higher rates ...