𝐓𝐗𝐌𝐂
𝐓𝐗𝐌𝐂|Aug 05, 2025 20:39
A few observations about bank lending (1) Bank lending appetite to households and businesses remains tepid per the latest survey. Commercial/Industrial and credit card loans remain in a net tightening posture, with consumer loans ex-CCs seeing marginal easing of standards. (2) What banks ARE interested in is lending to nondepository institutions ("Other Loans", also called N.E.C. loans), which are primarily used for speculation and private credit. This category has taken up a larger and larger share of outstanding loans since covid. (3) The share of marginal new loan creation y/y taken up by this "Other Loans" category is 56%, the highest of any period on record. (4) Overall, total bank lending is near the lowest growth rate of any expansion in US history, and just 28th percentile all-time. In other words, banks have (for now) stepped away from their role as credit creators to households and businesses. Home equity remains locked behind prohibitive borrowing costs, the banks are reportedly uninterested in writing loans to most households and businesses, and an increasing share of their activity is to less regulated entities. We may be in a credit cycle upswing, but it's unlike any we've seen before.(𝐓𝐗𝐌𝐂)
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