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Here Are the 6 Charts You Need to See In the Federal Reserve Senior Loan Officer Survey

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The Federal Reserve's January 2011 Senior Loan Officer Survey is out. (Full report here.)

The report is a simple and useful guide to what banks are seeing and thinking about in terms of commercial and residential real estate loans and consumer loans, including credit cards.

The idea is simple: the Federal Reserve, near the end of each quarter, sends out a questionnaire packet to select banks. The senior loan officers at the banks take a few minutes to answer the questions and then return the packet. The January 2011 survey was sent to 57 domestic banks and 22 U.S. branches and agencies of foreign banks.

The survey included three sets of special questions: the first set asked banks about changes in their credit policies on commercial real estate (CRE) loans over the past year; the second set asked banks about factors affecting recent growth in closed-end residential real estate loans; and the third set asked banks about their outlook for credit quality in 2011.

The results, as far as markets are concerned, can be distilled into six charts. Here are the six charts you need to see to get an idea of what bulls and bears are fighting about. 

First, banks reported fewer are tightening standards for commercial and industrial loans (C&I), which is a positive...

As well, banks reported seeing an overall increase in demand for C&I loans, also a positive...

Fewer banks reported tightening standards for Commercial Real Estate (CRE) loans, which should help project cancellations and delays stabilize...

While demand for CRE loans shows the need and desire for funding...

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Of course, the main problem in the U.S. economy is the continued, ongoing drag of a stagnant residential real estate market, and while banks reported fewer are tightening standards for prime mortgages (although there was an uptick in tightening standards for non-traditional loans)...

The main issue is that demand for residential real estate loans is severely depressed and has not upticked at all. Until demand for residential mortgage loans returns, housing deflation and unemployment remain the key issues affecting the national economy.

POSITION:  No positions in stocks mentioned.