Large national banks are easing their lending requirements, making it easier for average consumers and businesses alike to acquire financing, but there are not enough borrowers to go around. Mortgage loans are down and small businesses are avoiding taking on new debt. It is a cycle that has been unseen in decades.
The majority of financial activity at America’s largest banks is going to finance mergers and acquisitions among mid-size and large corporations. These large loans are nice, but most banks make the majority of their money from mortgages and auto loans. The increased competition for borrowers has caused an easing of lending standards.
The situation is great for the average consumer as long as banks are smart enough to avoid the overwhelming number of sub-prime loans that were made in the first decade of this century. The government may not be able to bail them out again.