For more than two years now, we have heard persistent reports of declines in lending terms, conditions, and standards. It is not just isolated reports from some examiners. Leading bankers, such as John Medlin of Wachovia, and survey data, also support these reports.
The question then becomes “what should we do?” We can certainly expect that in the next economic downturn credit problems will rise and weaker lending standards, if they exist, will only make matters worse. While the lending decision is ultimately that of the banks, this is an important area in which we can offer advice and general counsel.