Large banks lower lending standards to pre-crisis levels

Underwriting standards start to weaken

Top banks have lowered their standards on some of the riskiest lending, raising concerns that the nation is returning to the same weak underwriting witnessed before the 2008 financial crisis, according to a Bloomberg article.

The article cited the latest annual report from the Office of the Comptroller of the Currency that found banks have continued to erode standards, especially in large corporate loans, consumer loans and in leveraged lending.

“As banks continue to reach for volume and yield to improve margins and compete for limited loan demand, supervisors will focus on banks’ efforts to maintain prudent underwriting standards,” said Jennifer Kelly, the OCC’s chief national bank examiner, in a statement. She said the trends are “very similar” to those from 2004 through 2006.

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