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MNI BRIEF: Fed Worried About Weak Bank Lending


The Fed is worried about stunted growth in private lending and banks' net interest margins even amid resilience during the Covid-19 pandemic, according to its newest report Friday on supervision and regulation.

Bank profitability had rebounded to pre-pandemic levels by the end of 2020 but total loan balances at commercial banks declined from May 2020 due to reduced demand and tighter lending standards, the Fed said. Alongside deposit growth and lower interest rates, banks' net interest margins have been compressed.

The decline in lending is cited as a reason not to loosen capital requirements, MNI has reported.

MNI Washington Bureau | +1 202-371-2121 |
MNI Washington Bureau | +1 202-371-2121 |

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