consumer credit

The Great Consumer Credit Squeeze

Banks are busy putting the screws to the middle class once again, this time in the form of reduced credit. The Wall Street Journal reports Residential Loans, refinance of mortgages and home equity loans are being subject to absurd credit requirements.

Are the banks going to investigate if you chewed gum and if so, deny you a loan for it next?

Recently, Mr. Berg arranged a refinancing for a borrower with a very high credit score and lots of home equity and debt payments totaling just 19% of pretax income. But Mr. Berg said the lender was worried about a credit report showing a $14 missed payment to a credit-card company in 2001. The lender insisted on proof the money had been paid, which Mr. Berg said was impossible to get.

"Who cares?" he said. "It's nine years ago, and it's $14." He appeased the lender by having the borrower write a $14 check, though no one knew where to send it.

Pete Ogilvie, a mortgage broker in Santa Cruz, Calif., hasn't found a bank that will refinance a $250,000 loan on a $1 million property for a borrower with more than $200,000 a year in income and a high credit score. Banks balked because the borrower, a technology executive, was out of work for nearly a year starting in 2008.

Consumer Loans March 2010

Surfing around I came across this little noticed post over at the Wall Street Pit. Consumer lending hit an all time high in March . Literally I couldn't believe their graphs posted. But, it's true! Firstly, here is the Federal Reserve data release, H8: Selected Assets and Liabilities of Commercial Banks in the United States. Secondly, here are the graphs on Consumer Lending by Commercial Banks.


Consumers simply not borrowing anymore

One wonders how an economy that is 70% based on consumer spending can grow when consumers are paying down debt rather than spending.

(AP) -- Americans borrowed less for a 10th consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades.
November's $17.5 billion drop in total credit was the biggest amount in dollars terms since records began in 1943. That represents an 8.5 percent fall from the October borrowing level. That was the biggest percentage drop since total credit declined 9 percent in May 1980.