Credit is finally available, but no one wants it

Discussion in 'Wall St. News' started by ASusilovic, Aug 31, 2010.

  1. FORTUNE -- Finally, nearly two years after they were bailed out by Congress, big banks are beginning to ease lending standards for individuals and small businesses. But it's not exactly having the reception many believed it would. Just when credit becomes more available, there's little evidence of a surge in demand for it.

    Since the financial crisis, banks have been blamed for slowing the pace of economic recovery because of their reluctance to lend. Unlike larger companies that can borrow from bond markets, small businesses and consumers mostly depend on loans from banks. Federal officials have said tight credit has kept households from spending more and small businesses from hiring more.

    Now the U.S. Federal Reserve says banks are modestly expanding credit. But the new development, given all its potential, might still do little to improve America's prospects for economic growth -- at least in the near future.

    For the first time since 2006, banks are making commercial and industrial loans more available to small firms, with about one-fifth of large domestic banks having eased lending standards, according to the Fed's latest quarterly survey of banks' lending practices recorded during July 2010. This "offset a net tightening of standards by a small fraction of other banks," the Fed noted. Also, for the past six months, banks have continued easing lending to large and mid-sized firms.

    What's more, banks also reported that they stopped cutting existing lines of credit for commercial and industrial firms for the first time since the Fed added the question in its survey in January 2009. And as for consumer loans, banks also reported easing standards for approving loans.
  2. I just paid off an unsecured loan (25k). I thought, I'll do it again. The bank where I had the loan (Capital One) isn't lending to anyone. Other banks offer 5 or 10K unsecured pfftttt whaddya going to do with that? Searching the net, not much out there in unsecured loans. I applied to TD bank, declined, not even a counter offer. TD did not ask one follow up question on my application. Flat out said no.

    I suppose your next question is credit score may be a reason for the decline. . Let's put it this way. I've never been late, debt ot income is unremarkable and I just don't need the money. You know the old saying "borrow money when you don't need it".

    I think the banks want me to do a HE or something like that. No thanks.

    The way I see it, lot of bs bank chatter going on but no action.

    You know how banks were closing accounts and cutting limits, yea well they did it ot me too.

    So for the heck of it I applied to Lowes to see what banks are offering for new credit. On the spot I got 6k, I charged my $30 purchase and to make them happy. Point being, I can get a card for 6k unsecured. I asked the bank this question and they said "it's not unsecured, the card is the security to the loan. ?????
  3. Nutmeg,

    I hear ya. I had clients worth multiple in zeros....they owned all their "Manufacturing" machines, buildings out right and wanted to expand. The banks wanted them to put up 70% to 80% of the money and then pay prime plus 1, even though they had great credit and assets outright owned...worth 100X the loan amount.

    All of my clients told the banks, with whom they had years of relationships with, to go fuck themselves.

    Every single one of my clients ended up expanding, using their own money. This was last year. They said it was the best thing they have ever done....100% expansion on their own dime. They no longer carry lines of credit either....they fund in cash or do not fund at all.

    Keep in mind, these are private businesses.

    Another contact, started a truck company, he went in with secured contracts with bank notes. He had 200k worth of business. The bank said, well ...we can't help you fund your trucks because we need you to show 500K profit. He brought in a sound business plan. So, he walked away from the banks, went to a Rig Dealer. Showed the Rig Dealer the notes and said if you can find financing for one rig....I will buy more rigs from you as I grow. He was funded by the dealer. 3 years later, the trucking company is pulling in 500k profit...he has purchased two more rigs from the dealer.

    FUCK BANKS. I can't stand bankers or Banks. I keep a lot of paper in a Safe at I wouldn't earn more than .05% in a savings and under 4% in a Jumbo CD.

    I have closed all my accounts but my trading account and Checking account.
  4. Credit contraction... excess of housing... excessive house pricing... excess of labor.... servicing/retiring existing debt... all signs of DEFLATION. Question... Can the Fed offset deflationary forces with money printing? The little weasel, Bernanke, says "yes"... others say "no"... stay tuned.
  5. Eight


    Banks are becoming obsolete. I can do all my personal business with a prepaid card and at a kiosk in a convenience store. If I have to cash a check I can do that at the bank of issuance, they can't refuse to cash it, by law I believe... or I can deposit it and wait the astoundingly long time of 9 days before it's available... things like the 9 day wait serve to show how obsolete the banks are becoming in an age of electronic banking...

    But think about this: fractional reserve banking creates more money than the fed does with it's "printing presses"... if we suddenly up the money supply with a lot of lending then we are going to have inflation... lending should start up slowly over the next couple of years or we might be in a real mess..
  6. And in a deleveraging environment money is destroyed faster than the Fed can print.
  7. Banks which do so are "playing the float game"... earning a bit of interest for themselves while your money is unavailable to you, in limbo. With interest rates near zero, isn't as valuable as it used to be.

    In this electronic age, checks deposited before the "cutoff time" for the bank clear SAME NIGHT. Checks after the cutoff time clear NEXT DAY. In most cases, no need for any longer of a hold on your funds than that... except for the bank's greed to try to make some on the float.
  8. Eight


    My Credit Union held a check for nine days recently!! It was a personal check, not from the area the CU is in...
  9. Credit contraction... excess of housing... excessive house pricing... excess of labor.... servicing/retiring existing debt... all signs of DEFLATION. Question... Can the Fed offset deflationary forces with money printing? The little weasel, Bernanke, says "yes"... others say "no"... stay tuned.

    I hear ya loud and clear Nutmeg. I have been on the phone with Brazil and other clients world wide. Many are doing well and they are very up beat about "Global Growth" as a whole. However, with that said, many see the US as a "Lone Wolf" that will have far more pain than most of the World going forward.

    Russian gdp at 4.0%, India 8% or so, German Unemployement onlyl at around 7% and I'm hearing good news outa Brazil and India.

    So, questions is, do we hit deflation while the rest of the world recovers. Stay Tuned.
  10. And in a deleveraging environment money is destroyed faster than the Fed can print.


    Yes, hence gold up near 1300 and target for 1500. Hard assets such as OIL WELLS, Metals on the Physical end, coins, and even real cheap taking the place of holding money for investments.

    FEDS are trying to keep people from keeping rates low. They want its 70% of GDP. However, the smart people are saying, FUCK YOU to the FED and moving cash into Hard Assets and keeping piles of cash in Safes at home for spending when needed.

    The rich are now saying fuck it, and buying goods, cars, designer cloths, etc. as their money is becoming just as worthless as yours and mine.
    #10     Aug 31, 2010