Yellen says US banks may tighten lending and negate need for more rate hikes

[brooklynite]

Source: Reuters

WASHINGTON, April 15 (Reuters) - U.S. Treasury Secretary Janet Yellen said banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures, possibly negating the need for further Federal Reserve interest rate hikes.

Yellen said in a "Fareed Zakaria GPS" interview that policy actions to stem the systemic threat caused by last month's failures of Silicon Valley Bank and Signature Bank had caused deposit outflows to stabilize, "and things have been calm," according to a CNN transcript released on Saturday.

"Banks are likely to become somewhat more cautious in this environment," Yellen said in the interview, which is scheduled to air on Sunday. "We already saw some tightening of lending standards in the banking system prior to that episode, and there may be some more to come."

She said that would lead to a restriction in credit in the economy that "could be a substitute for further interest rate hikes that the Fed needs to make."

Read more: https://www.reuters.com/markets/us/yellen-says-us-banks-likely-pull-back-credit-cnn-interview-2023-04-15/

[yaesu]

1. Instead of that which just helps tRump get reelected, how about kicking

the wall street bankster off the Fed and put someone in charge that doesn't want to destroy the economy before the next election
E

[MichMan]

3. Why would President Biden want to remove Powell from the Fed....

when he just renominated him last year? Powell was then confirmed by the Senate 80-19

[Igel]

2. We'll see from what practitioners decide.

Thing about faculty is that whatever they publish counts towards tenure, but if whether it's wondrously right or woundingly wrong it still counts towards tenure.

Banks are expected and there have been preliminary data--some anecdotal--that it's harder to get loans to expand, upgrade, or start businesses.

The drop in savings and the increase in credit card debt and things like car loan defaults *should* seriously curtail spending. Esp. has credit card and short-term loan rates increase. I've heard contradictory reports--savings are at a low but savings rates are up from 1/23. And that credit card debt is at a high--but when we had really high increases in take home pay pre-COVID we *also* had really high CC debt.

All the COVID "you got money!" monies should be mostly drained by now, so federally subsidized savings that justifies present allegations of fiscal hardship should be past. (That's never made sense to me. Savings at record or near-record highs, but it's a fiscal catastrophe and everybody's broke. You know, during COVID I ate out and used services about as often as my parents did in the early '70s--then it was deemed 'frugal' and 'responsible.'. A colleague a few years back said that they realized that they were running into debt because they--a family of 5--ate out 2-3 times a week and at $80 each time were spending $800-1000 a month just on dinners ... My dinners these days, years later, cost less than $5 each.... Do the math.)

In two years I've gotten raises for 6% and investments increased 5%.

Overall inflation over the last 2 years is a bit more than 14%.

I was going to retire at 67. With inflation to date I can't without running out of more than SS and my pitiful TRS amount by the time I'm 80 so really can't retire until I'm 68. Mother died at 87, father at 83 - 3 days. SS + TRS is maybe $24k/year.

[paleotn]

4. Not necessarily a bad thing. Money has been way too easy for far too long.

Tighter lending and higher interest rates will slow growth, but also moderate the asset bubbles we've seen the last 20+ years. My feeling is, tighter money would have still produced as much or more total growth over the same period, without the crazy boom and bust cycles.

[IronLionZion]

5. Sounds doable

high interest rates are squeezing people trying to buy a home or something requiring financing. I've read that commercial office real estate is the next one to crash because of low tenancy where people are still working remote.

Banks need to be more cautious about risky stuff like crypto.

[SouthernDem4ever]

6. damn. just when I was starting to earn some interest on my savings