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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:

  1. Credit remains tight and banks are still not lending to sound borrowers.
  2. 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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