Banks tightened their lending standards for businesses and households in the second quarter and expect that to continue for the rest of 2023, according to a survey of loan officers conducted by the Federal Reserve, YahooFinance.com reported. The bank officers cited a variety of reasons for the tightening, including an uncertain economic outlook, deteriorating credit quality of their loan portfolios and concerns about bank funding costs as well as deposit outflows. “The overall picture is of tight and tightening lending conditions,” Federal Reserve Chairman Jerome Powell said last week about the survey, after the Fed decided to raise interest rates to their highest level since March 2001. Bank officers also attributed some of their tightening to increased concerns about the effects of legislative, supervisory or accounting changes. Last week the Fed and other regulators unveiled a proposal that would increase capital requirements for banks with $100 billion or more in assets by an aggregate of 16%, as part of an effort to cushion lenders against potential future blowups. Some banks are pulling back on lending in anticipation of the new rules, or warning that they may restrict lending in the future.
