Loan crunch hits home

Money tight for South Sound bankers, car sellers, builders

By Rolf Boone | The Olympian • Published October 03, 2008

A stalled national economy and a banking sector gripped by uncertainty has resulted in tighter lending standards for South Sound auto dealerships, home builders and retailers.

Economic volatility the past two weeks, highlighted by steep sell-offs on Wall Street and large bank failures, has created new concerns for the banking industry, Washington Business Bank President and CEO Jon Jones said Thursday.

Banks are either unwilling to lend to each other or to customers because of risk or unable to lend because of a lack of capital, Jones added.

However, bankers are hopeful after the U.S. Senate passed $700 billion in legislation intended to help the economy. The same legislation goes to the U.S. House of Representatives again today after it failed to pass the measure Monday.

"It's a positive move for the country," Venture Bank spokesman Joseph Beaulieu said about the Senate vote. "When you erode consumer confidence it's not good for the economy, but something has to be done to get this economy moving again."

Fears of tighter credit

Until the bailout is approved by both houses, tighter credit will be the norm for some businesses and their customers.

Hanson Motors owner Vince Hanson, who has been in the car business since 1974, said year-over-year monthly sales are down 15 percent.

"There have been recessions in the past but this seems to be a pretty substantial downturn," Hanson said. "There are a lot of things that we're having to deal with."

That includes record-high fuel prices and an inability for some customers to get car loans, he said.

Customers with good credit still can get a loan, but about 50 percent of a dealers' business used to come from customers with poor credit. Loans for credit-challenged customers are drying up, Hanson added.

His business also is paying a higher interest rate on lines of credit to buy cars, which has increased his business costs, he said.

"We're having to work harder and harder," Hanson said.

Car sales

Car sales are down statewide, according to Washington State Auto Dealers Association data. Through August, compared with the same period in 2007, car and light truck sales are down 13.6 percent, the data show.