U.S.: Bank Lending Increases

Wall Street Journal:  Some big U.S. banks are starting to increase their lending to businesses as demand for loans rises and healthier banks seek to grab customers from weaker rivals.

After declining steadily for most of the past two years, the amount of commercial and industrial loans held by commercial banks inched upward during the past two months, according to the Federal Reserve.

Until recently, a chronic lack of lending to businesses was seen by economists as one of the obstacles to healthy recovery. Commercial and industrial lending “is the last thing that turns in a business cycle,” said Mark Zandi, chief economist of Moody’s Analytics.

Coming off the dramatic lending drop after the crisis struck, these increases are modest. The amount of business loans outstanding remains well below historical levels.

In addition, new activity varies significantly from bank to bank and industry to industry.

Still, the uptick is notable, say banking analysts. Whereas the crisis forced banks to tighten lending standards and focus on restructuring problem loans, “as banks get healthier, they get more rational and reasonable about normal risk taking,” said the CEO of J.P. Morgan Chase’s commercial bank, Todd Maclin.  Read more…..