A new report by Celent, a research firm focused on the global financial services industry, claims that lending has actually increased during the credit crisis this year:  "It appears that policymakers are making a variety of mistakes regarding the current financial crisis.  If that is the case, the policy tools that they are employing may very well be the wrong ones," says Octavio Marenzi, head of Celent and author of the report.

An article in Banker & Tradesman (subscription required) this week says: 

The authorities may have access to data that is not publicly available, but Marenzi said if so they should release that data to better support their public statements. More likely, he says, they are just extrapolating from the experiences of a few big banks to the whole system.

Sub-prime lending is down compared to the increases overall, he said, but that’s “a very healthy reaction ... certain banks took on irresponsible levels of risk, lending to people they shouldn’t be lending to.”

The decline in sub-prime does mean some struggling businesses are having trouble obtaining credit, however, “a banking system that declines to extend credit to money-losing businesses is not a system that is flawed, it’s a system working as it should.”

We'll see how this all plays out into early/mid 2009, but the report does shed some interesting light on the phenomenon.  I know from my own recent experiences that both mortgage loans and commercial/business loans are certainly available. There are risk based (credit score based) premiums in place so it will cost more if you have poorer credit, but the money is attainable.  Our clients have been able to get mortgage loans recently at historically low interest rates (low to mid 5%) with full documentation and provable assets, of course, but as the report says, that is a natural reaction to the market.  On the commercial end, I am involved in an industrial property sale right now, and my client has three local banks fighting to give him a business loan to buy the property and expand his business - also at very low rates compared to just a year ago.  Simply put - loans are available at very attractive rates.

But I have also heard horror stories about larger loans, from real estate developers especially, and  that is part of the problem why many real estate projects (not to mention larger business expansion plans) are stalled right now.  The big loans - $100M+ type of loans, I mean - are extremely tight and nobody wants to take on that type of risk right now in an economic downturn.  The federal government is really trying to shake loose some of the "bigger money" - ineffectively so far, but we'll see what else the Federal Reserve can do and what the new administration has in mind with the other half of the $700B "economic recovery" money in 2009.