Lending May Tighten With New Stress Test Rules

WASHINGTON, DC—The FDIC has published the final rules for the stress testing required by the Dodd-Frank Act. For institutions with assets greater than $50 billion, the law goes into force this year. Institutions with assets between $10 billion and $50 billion can wait until October 2013. The FDIC board also approved a final rule that amends the definitions used to identify concentrations in higher-risk assets to better reflect the risk posed to institutions and the FDIC.

Lending by commercial banks to projects has been subdued since the crash, although it has been improving. The most recent Senior Loan Officer Opinion Survey on Bank Lending Practices by the Federal Reserve Bank noted, “A modest fraction of domestic banks, on balance, reported having eased standards on CRE loans over the past three months, while a sizable fraction, on net, continued to indicate having experienced stronger demand for loans.”