Dec 1, 2020 - Economy

Banks made it harder for consumers to get loans last quarter

Dion Rabouin

Illustration of piggy bank wearing a robber’s mask — Illustration: Eniola Odetunde/Axios

Loan growth at U.S. banks declined in the third quarter, as banks tightened lending standards and demand from businesses fell.

Why it matters: It's the latest piece of evidence showing that the Fed's programs are helping prop up Wall Street but aren't trickling down to help most everyday Americans.

Banks cited the poor economic outlook and a reduced risk tolerance for their decisions to further tighten loan standards. Some banks also pointed to less aggressive competition from other lenders.

Driving the news: Gross loans at the 15 largest U.S. banks, excluding Paycheck Protection Program loans, fell 1% quarter over quarter in Q3, and overall lending saw a 0.9% decline, S&P Global announced Monday.

Commercial and industrial loans fell as 14 of the 15 largest U.S. banks reported a decrease.

The big picture: The news followed the Fed's latest survey of senior loan officers on Nov. 9 that showed banks continued to tighten standards for lending despite the Fed's QE4ever program and hundreds of billions of dollars in financing via its special purpose vehicles.

For consumers, banks are requiring higher minimum credit scores for credit cards and auto loans.
Small businesses are seeing higher collateralization requirements and higher premiums on loans as well as the use of interest rate floors, the survey found.

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Banks made it harder for consumers to get loans last quarter

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