U.S. banks tighten lending with Europe

THE OLYMPIAN • Published January 31, 2012 Modified January 30, 2012

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A Federal Reserve survey has found that more than half of U.S. banks that lend to European banks have tightened their standards, a reflection of the persistent European debt crisis.

Of the 26 U.S. banks surveyed that make loans to European banks, five said they had tightened their standards considerably in the October-December quarter. Another 10 said that they had tightened them somewhat in the same period, according to the survey released Monday.

Many economists predict that Europe’s debt crisis will push the region into a recession this year. Many European banks are heavily exposed to government debt, making the banks more of a risk.

In the U.S., banks are seeing more small businesses apply for loans, according to the Fed’s quarterly survey.

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