Banks Still Not Lending to Sound Borrowers
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.