Read the original story referenced: https://www.axios.com/2023/08/14/bank...

Borrowing money's becoming increasingly challenging, and you might be partially to blame.

The Fed's rate-hiking campaign has made banks more hesitant to lend money. This reluctance to lend can impact economic activity and lower inflation.

Banks are hoarding money partly because of the failures of SVB, Signature Bank, and other regional banks a few months back.

An analysis by Evercore ISI, an investment banking advisory, indicated that this is the fastest and most dramatic shift in lending standards. After the pandemic, an intense effort was made to stabilize the economy in 2022, leading to stricter lending standards.

The Senior Loan Officer Opinion Survey reveals 51% of banks have tighter lending standards, the most since the 2008 crisis.

Fed chair Jerome Powell acknowledges that these tighter standards could negatively affect the economy.
Traditionally, the Fed would lower rates to encourage lending, like what was done during the pandemic when interest rates hit zero percent, but that seems to be in the past.

Even when considering the extent of the Fed's rate hikes, the current tightening of credit standards is double that of the 2004-2006 cycle.

Loan demand has also decreased more than in previous cycles, likely because credit is costlier and harder to obtain.

Part of the blame falls on business owners.

When the Fed dropped interest rates to zero, most owners took out loans because they didn’t cost anything. They ran their business on debt, throwing their balance sheets out of whack.

#FedRateHikes #USBanking #EconomicImpact

Follow Amserv on Social:
LinkedIn –   / american-management-services-inc  
Twitter –   / amservbiz  
Facebook –   / amservbiz  

And Connect with Lou Mosca on LinkedIn:   / loumosca  


Sign up for our newsletter at https://www.amserv.com

American Management Services, Inc. was founded in 1986 by George Cloutier, a graduate of Harvard College and Harvard Business School.

Having focused his MBA thesis on delivering profits to small business, Cloutier sought to revolutionize business management practices, and founded American Management Services to do just that.

The company was originally started with one employee and $42,000 in capital. Today, American Management Services has over 120 full-time employees; seasoned executives who are dedicated to the immediate improvement of cash flow, profitability, and growth for our clients.

As the leading provider of implementation-based profit management and cash management services, the American Management Services’ teamwork directly with owners to implement the necessary changes that grow sales, profits, and cash flow.

Through our unique system of Pre-Determined Profits™, these consulting services, commonly available to only the largest companies, are exclusively offered to small and mid-sized privately held companies with annual revenues ranging from $3 million to $500 million.

If you are looking for a better solution to improving your company’s sales, profit or cash-flow, American Management Services is more than just another consulting business. We provide RESULTS NOT REPORTS™.