The Fed says banks are getting cautious on lending. Banks. Cautious. The same industry that once packaged mortgages into a stack of mystery meat and sold it to pension funds.
The October survey shows tighter standards for small firms and commercial real estate. Subprime borrowers face tougher credit too.
Read that last part slowly. Subprime borrowers. People already rejected by the nicest possible version of a bank are now being rejected by the grumpy version.
Fake press release time.
FOR IMMEDIATE RELEASE: The American banking sector announces it has discovered the word "no." Executives say they are "thrilled" with it. They plan to use it often, especially on the guy who wants a loan to open a third vape shop in a strip mall with a 40 percent vacancy rate.
Commercial real estate is the real comedy. Office towers sit half empty. Somebody holds the debt on those towers. That somebody is now squinting at the next applicant and asking, quietly, whether anyone still wants a floor of cubicles.
Small businesses get the squeeze too. The bakery. The dog groomer. The guy who sells artisanal pickles to nine people on Instagram. All told to come back after the vibes improve.
The financial press calls this a signal for the economy. Fine. Stare at a chart of lending standards for an hour. The line goes up, then down, then up. Same as every other line you have ever stared at.
Retail traders will read this and sell their index funds to buy a stock tip from a man named Dax who films in a rented Lamborghini. Dax is not cautious. Dax has never been denied a loan, because Dax has never applied for one.
The Fed surveys banks about being careful. Banks answer honestly. Everyone nods. Nothing changes until it all changes at once.
Your portfolio will survive this. It was never doing anything anyway.
Photo by Steve Pancrate on Unsplash
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