The Credit Squeeze May Be Easing

Since the start of the financial crisis, U.S. banks have been more interested in shoring up their balance sheets than lending. Banks raised their levels of equity capital after the U.S. Federal Reserve 2009 stress tests revealed weakness in their assets because of the housing slump and the deepest recession since the 1930s. Now, U.S. bank credit is growing at the fastest pace in three years, giving the Fed confidence in the economic expansion’s staying power.

Financial institutions increased commercial and industrial loans by an average annual pace of almost 10 percent in the third quarter, the highest since the comparable quarter in 2008, according to Fed data. The latest numbers show seasonally adjusted loan growth of 15 percent in October and 6.1 percent in November.