BANKING & FINANCE - May 30, 1996

Banks Tightening Standards for Consumer Loans: A survey by the Federal Reserve Board of 56 domestic banks and 22 U.S. branches of foreign banks shows that 20% of them had tightened policies for approving new credit card applications and 10% had tightened standards for non-credit card installment loans. The Fed also found that willingness to make consumer installment loans declined for the first time since 1991. “The banks attributed their concern about future delinquency rates to increased household debt burdens and to a greater willingness of households to declare bankruptcy,” the Fed said. The May survey found that standards for residential mortgages were little changed, whereas those for commercial real estate loans were tightened some.