Fed Urges Tighter Lending Standards.

• Position: Federal Reserve Board - Brief Article

In a letter to bank executives and examiners, the Federal Reserve's director of banking supervision urged vigilance in preventing lower standards for lending. The Fed official noted that problem loans, while relatively small, are increasing during a period of economic strength. The director of banking supervision asserted that credit is being extended to borrowers based solely on the belief that strong performance in the past will continue, and that meaningful "stress tests" (i.e., estimates of the impact of negative...