I read, that in a survey of senior loan managers, they had tighten credit over the past 3 month period.
For nearly a decade, while prices push higher by loose credit standards, it was ok to give money away for any credit, for any high price real estate that moved decisively away from the trend line and moving averages. This was a time of high prices rises, that a prudent loan manager should of tighten standards, simple due to excess increases in prices. Now that the worry period is over and prices have come down and the risk of further declines exist, but considerably less by my trader's gut then when the market was roaring up, they tighten credit, when they should be loosing. A loan standards manager must think like a trader in any market. When the market goes up extremely you must look to take something off the table. In the case of a fund manager, that is credit standards tightening. The reverse is when a market has declined, no different than our stock market, you look to cut your shorts, and start adding longs. This would be loosening standards to get money out in a less risky market as to potential decline size. What is wrong with the brains of this country anymore? The proverbial cow is out of the barn now they want to lock the door and keep it locked. Maybe if they try now to leave the door open when there is no cow, maybe the cow will come back. By the cow, I mean the balance in the market. This is how to manage risk and do the job your business calls for.
It is accident prevention after the crash.
I don't mean to be wild like the past times that they were without rules. I mean to be reasonable against this market, to open up the door for the cow.
Richard
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