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Mix-Ansicht- Credit Crunch nicht durch Daten belegbar, sagen die Bloomberger - kingsolomon, 12.11.2002, 16:15
Credit Crunch nicht durch Daten belegbar, sagen die Bloomberger
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11/12 00:01
Credit-Crunch Claims Are Demolished by the Data: Caroline Baum
By Caroline Baum
New York, Nov. 12 (Bloomberg) -- What if the Federal Reserve cut rates and no one cared?
That's the gist of stories suggesting the U.S. is experiencing a ``credit crunch.''
``What good is cheap money if banks won't lend it and firms don't want it?'' asks the New York Post in a Sunday article, ``Credit Crunch Looms.''
The authors of this and many similar articles don't understand what a credit crunch is, which is probably why they use the term without defining it and then find data to support what they'd like it to be.
A credit crunch is a supply-side phenomenon: at any given interest rate, there is less credit available. In other words, banks don't want to lend.
The support data for the credit-crunch articles are confined to one category of bank loan -- commercial and industrial loans, which are used primarily to finance business inventories. A quick glance at C&I loans, available in a weekly report from the Fed known as the H.8, reveals that C&I loans peaked in February 2001 and have declined steadily since then to stand 13 percent below their high.
Given the plunge in inventories, the justification for C&I loans, the drop in that category is no surprise. Business inventories peaked in January 2001 and declined for 15 consecutive months before inching higher since April. The inventory-to-sales ratio is at an all-time low of 1.34 months, which means it would take about 5 1/2 weeks for businesses to unload their existing inventory at the current sales pace.
Exception to Rule
``Businesses are living hand-to-mouth,'' says Joe Carson, an economist at Alliance Capital Management. ``It lowers the odds of a double-dip recession'' since any increase in demand will have to be met by increased production.
Outside of loans to finance inventories, it's quite a different story. Real estate loans increased at a 21 percent annualized rate in the last three months; home equity loans were up 24 percent, which is less than half the rate from three months earlier.
Total loans and leases, which is bank credit less securities purchases, rose 10 percent annualized in the 13 weeks ended Oct. 30, up from a 2.6 percent rate six months earlier. Loan volume actually contracted, on a 13-week annualized basis, in early 2002 and from June through October of last year.
Credit Risk, Credit Crunch
Add in securities, the other category of bank assets, and bank credit expanded at an 11 percent annualized pace in the past 13 weeks.
On aggregate, it seems, banks are supplying more, not less, credit. C&I loans may be headed south but the other categories are expanding briskly.
If companies posing a high credit risk can't borrow or have to pay penalty rates for loans, that's not a credit crunch. That's credit risk being priced by the lender.
The current situation ``is not like the early 1990s, when banks were raising their capital-to-asset ratios and would not lend to anyone,'' says Neal Soss, chief economist at Credit Suisse First Boston.
Nor is it like earlier episodes where a ceiling on bank deposits prevented banks from paying market rates to fund loans. This time, ``it's much more selective,'' Soss says. ``Banks are eager to lend to the household sector. And some businesses have no trouble getting credit. But to a certain class of companies'' -- such as telecom and energy companies -- ``credit is unavailable.''
Tighter Slower
In the Fed's most recent (August) quarterly senior loan officers' survey on bank lending practices, the percentage of banks that tightened standards on C&I loans edged down to 23 percent from 25 percent in the April survey. One bank eased its lending standards for the first time since 1999, the Fed reported.
Credit standards are still tightening, in other words, but to a lesser degree than they were previously.
There's another reason focusing on C&I loans creates an inaccurate picture of the availability of credit in the economy. ``As a fraction of bank assets, C&I loans have been in a trend decline for 15 years,'' Soss says. ``Ignoring the cyclical ups and downs, they went from about 30 percent of bank assets in the mid- 1960s to mid-1980s period to 20 percent now.''
The reason, Soss says, is that the Bank of International Settlements requires banks to hold capital against loans, with the amount differing depending on the nature of the borrower. Corporate loans carry higher capital requirements than loans to other entities, Soss says.
Market Borrowing
More and more corporate credit demand is being satisfied in the credit markets. While corporate debt sales have slowed this year from last year's record pace, the $447 billion sold year-to- date isn't exactly shabby.
Credit is available for creditworthy borrowers while households are encouraged by teasers and promotions to borrow more.
Come to think of it, I wonder if the same folks writing missives on the credit crunch aren't also penning pieces on excessive debt loads.
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