- A March survey by the Dallas Fed showed a decline in total lending and tighter lending standards.
- The investigation was conducted after Silicon Valley Bank and Signature Bank failed.
- The regional Fed said the bank’s outlook “continues to deteriorate.”
A credit crunch appears to be forming in the Southwest region of the US economy, with consumer lending declining and credit standards rising, according to a Dallas Fed survey after two US bank failures last month. was shown.
The financial institution also told the Federal Reserve that it expects more customers to not repay loans on agreed terms in the coming months. Dallas Fed Releases March Survey this week.
“Credit standards and conditions continue to tighten sharply, and we have also seen significant increases in loan prices during the reporting period,” the bank said.
In a survey conducted March 21-29, which surveyed 71 financial institutions, the index tracking overall lending fell to -18.3. The index was 4.8 for him in February. The biggest decline among loan types was consumer loans, whose index fell from -17.8 to -33.4.
At the same time, indicators of credit and lending standards showed that lenders such as banks and credit unions are tightening access to funding. The index he fell to -35.9 from -29.8 in February.
Lenders have generally made it more difficult to access loans since the Federal Reserve began raising rates last year.
The Dallas Fed survey runs twice quarterly, so it measures the temperature of financial institutions in Texas, northern Louisiana and southern New Mexico before the sudden Silicon Valley and Signature bank failures last month. was set to
A “crisis of confidence in the banking system” was caused by bank failures, UBS’s takeover of troubled lender Credit Suisse, and downgrades of several regional banks, an anonymous survey respondent told the Dallas Fed. Told. “In my opinion, the further macro-effects of the rate hikes have pushed the economy into a hard-landing recession,” they said.
The Dallas Fed said the outlook for banking in March “continued to deteriorate.” Officials told the bank they expect loan demand and business activity to shrink and bad debts to rise over the next six months.
Federal Reserve Chairman Jerome Powell suggested last month that lending could retreat following the failures and foreclosures of the SVB and signatories.
“The events in the banking system over the past two weeks are likely to tighten credit conditions for households and businesses,” Powell said at a press conference about the central bank’s ninth consecutive rate hike.