As Bankers Feel The Heat on the Hill Credit Markets Start To Thaw
Wednesday, February 11, 2009SUSIE GHARIB: As we reported, lawmakers in Congress today pushed top American bankers to increase their lending to businesses and consumers. While the edges of the U.S. credit markets are starting to show improvement, experts say there's still a lot work that needs to be done. Suzanne Pratt reports.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today New York City experienced a midwinter thaw as the temperature topped 60 degrees. For months now, investors and consumers have been hoping for a similar defrosting in U.S. credit markets. While most experts agree it's underway, exactly how much melting is going on is a matter of debate. Credit strategist Andrew Brenner says some markets are definitely in the process of unlocking.
ANDREW BRENNER, CREDIT STRATEGIST, MF GLOBAL: The corporate markets, which I think is a real big indicator of thawing, is starting to come to life. Corporations are able to come to market and January you had one of the largest issuances of new issue corporate bonds that you've ever had.
PRATT: Large companies from Cisco to General Electric have recently raised billions of dollars through investment grade corporate bond offerings. That money can be used for everything from payrolls to acquisitions. And today, chief executives of major U.S. banks told Congress they were lending despite serious economic headwinds. On top of that, mortgage rates have tumbled thanks to the Federal Reserve's recent purchases of mortgage-backed securities. Nevertheless, there is a perception that business and consumer loans are tough to come by. Despite those lower mortgage rates, lending requirements at savings banks have recently become more stringent after a slight easing in January. As one mortgage expert described it, every day banks tighten the screws a little more for borrowers. Charles Blood of Brown Brothers Harriman says it's far from business as usual for much of the private banking system.
CHARLES BLOOD, DIRECTOR, STRATEGY RESEARCH, BROWN BROTHERS HARRIMAN: Can the banks do what they normally do? There we see the answer is not yet, that they're basically stuck where they were 10 or 11 months ago.
PRATT: Taking the temperature of U.S. credit markets is tough because there's no single indicator to watch. Still, most experts agree since last fall when virtually no one could borrow anything, credit markets conditions have definitely improved. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
