banks to lend support, but try telling that to consumers who have difficulty to get a mortgage or a loan or credit card to purchase a car. In recent weeks, politicians have accused the financial institutions not to extend enough credit, despite the fact that it has received billions of taxpayer dollars in recent months.
But bank executives, including CEOs of eight major banks who have testified before Congress last week, say they have continued to grant new loans and that the country would face a liquidity crisis even worse if the Government had not intervened with rescue plans.
However, it is difficult to deny the fact that access to credit has become more difficult. One reason, according to experts, is that many non-banks that provide loans, often called "shadow banking system", withdrew huge amounts of money from the economic system.
The mutual funds and insurance companies, for example, were formerly usual buyers of bonds issued by companies looking for cash, says Rick Spitler, director of consulting Novantas in New York, which deals financial institutions. This does not happen anymore, forcing companies to address the banks for credit.
Furthermore, large financial investors such as hedge funds or pension funds are no longer interested in bonds tied to mortgages, credit cards or business loans, limiting the ability of banks to grant new credit.
"The shadow banking system has still not recovered enough and the bank capital is insufficient to cover the deficit of credit supply," said Spitler.
Some banks and financial co-operatives have tried to replace the large financial institutions in providing credit but fail to satisfy all requests for loans, says Sherrill Shaffer, a science teacher banking at the University of Wyoming in Laramie and worked as a chief economist at the Federal Reserve Bank of New York for much of the year 80.
Despite this, many banks are behaving as usual during a recession, tightening all types of credit and trying to account for the majority of capital to cover any additional losses.
These explanations have not satisfied the many consumers who have sent mail to CNNMoney.com to share their experiences.
George, who lives in Wake Forest NC, wrote following the testimony of the top CEOs of the banks before Congress, claiming that Citigroup has recently increased the rate on your credit card di'interesse from 6% to 15% because of higher funding costs.
Even small businesses have suffered. Chris, a company vice president of retail trade in Kansas City with more than 500 employees, says his company is now encountering many difficulties in finding a loan after Bank of America closed its credit line.
Another small businessman who owns a construction company near Savannah, Ga., says he is not able to obtain funding from five different institutions, including the giant regional SunTrust, the purchase of land. "Welcome to our nightmare bank," he wrote.
banks contacted in this regard, all aided by the state, said that they are simply trying to manage risk in the current credit and that some changes suffered by consumers or contractors are justified in many cases.
"All our decisions are taken regarding the claim in the interests of our customers, our company and investors," said Wells Fargo in a statement.
Citigroup, which received $ 45 billion from the government, says he wants to change the interest rate on credit cards that have not changed in the last two years and added that customers can still refuse and continue to use their cards until they expire. "We are implementing these changes in order to continue to lend in this situation," said Citigroup spokesman Samuel Wang in a statement.
Other experts argue that banks are raising the necessary requirements, but only to customers with low incomes.
A survey on the net on more than 1,000 people conducted in December by Synergistics Research, a firm in Atlanta specializing in market research in the financial sector, has revealed that a consumer has seen a six denied the claim in the last three months. But for families with income less than $ 50,000 a year, the percentage rises to 25%.
So what's the ideal candidate to get a loan these days?
"Someone who has no need of money," says Charles Wendel, head of Financial Institutions Consulting, a bank consulting firm in Connecticut. The credit is available for those consumers with a high solvency ratio, a stable job and a house of high value, said Wendel. In other words, banks are trying to minimize the number of defaults. "The banks are limiting their credit cards," he says. "They are paying but provide a more selective."
However, many readers have reported that they had difficulty getting a loan even though he had never missed a payment in the past.
Why you can not get a loan
see also: Credit
difficult (pt. II)
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