In the throes of the credit crisis, banks were vilified for granting loans to unworthy borrowers. The unsurprising result: Banks pulled back. They revamped risk-management policies and clamped down on credit.
Now, it seems, banks are being hammered again — this time, for being too vigilant with credit. At a conference of the National Association of Business Economists yesterday, FDIC chief Sheila Bair warned that tight credit could hamper economic recovery.
“A light needs to be shined on this and explanations need to be made where credit is not being provided,” Bair said, urging borrowers to identify and report banks that aren’t lending to consumers and small businesses.
Last year, total bank outstandings fell 7.5%, the steepest decline since 1942.
