Posted by Lending Club :: May 6, 2010 @ 2:10 pm
This morning most news media outlets reported their reactions to remarks made earlier by Federal Reserve Chairman Ben Bernanke at a bankers conference in Chicago. Although reporters do not seem to agree on what it all means, two clear statements about bank lending came out of it:
- Credit remains tight and banks are still not lending to sound borrowers.
- Bank lending continues to shrink despite massive government efforts.
Perhaps Bernanke does not know yet about Lending Club, but the exact opposite is happening here: first, Lending Club rates are designed to reward creditworthy borrowers with better rates on personal loans; and second, our volume continues to grow at a 5-10% rate every single month to date: in April alone, Lending Club issued more than $9.5 mm in loans.
Here is a round-up of media coverage of Bernanke's remarks so you can make your own assessment:
Associated Press: "Banks should make loans to sound borrowers" by Jeannine Aversa
The Wall Street Journal: "Bernanke warns of small-bank risks" by Luca Di Leo
Market Watch: "Bernanke optimistic about bank lending outlook" by Greg Robb
The Economic Times: "US bank lending still shrinking: Bernanke"
Reuters: "Bernanke sees more conservative securitization mkt" by Kristine Cooke
CNN Money: "Bernanke: Fed's not waiting for Congress on reform" by Ben Rooney Bloomberg
BusinessWeek: "Bernanke sees 'reasons for optimism' on bank credit" by Scott Lanman and Vivien Lou Chen
What do you think it all means? Leave us a comment below.
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9 Comments
I think the implications are clear, financial institutions are not
sound yet. Housing bubble was large and it takes time to deflate.
This means golden opportunity for alternative financial services,
like you guys. Paying off credit card debt and social lending are
ideas, that definitely should gain more attention.
This makes me so MAD, I think they need to audit the fed and start
kicking these bankers butts!
The Fed is working with other government regulators and investors
to strengthen the infrastructure of key financial markets, he said.
Among them are the market for securities repurchase agreements, or
"repos," and over-the-counter derivatives.
Why would they lend? They got that money for pretty much nothing.
Why take the risk if you get a profit for nothing.
they are making money without lending risks.. so why change.
If a bank holds the public interest at heart, they should lend. How
else can they survive without borrowers. Yes, they could keep
getting money from bailouts, but their image will be ruined (as
sachs is finding out) and new banks will emerge take their place.
No one will trust the old banks. Without the public trust, they
have no business calling themselves banks. This is why Lending
Club, though not without risk, has a strong appeal to many levels
of investors.
Well, here in Canada the government has pretty tightened mortgage
rules (all borrowers must qualify for a five-year fixed-rate
mortgage, even if they choose a variable mortgage with a lower rate
or a shorter term), so we have experienced surge of buyers, but it
will be increasingly difficult to borrow, especially for young
people, no matter how willing our banks will be.
In Canada, there is a large number of Canada Government Grants
available for a multiple industries and types of businesses. In the
US, I'm not sure.
Outstanding observation! This is what we are all experiencing, but
very few newspapers call it what it is.
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