It wasn't the March 10 collapse of Silicon Valley Bank that prompted Carissa Rodeheaver, head of a community bank tucked in the mountains of western Maryland, to rethink strategy.
this week reinforced that the banking system wasn't on the brink of a broad crisis but was making credit less available and more expensive, a process that should mean less consumer and business spending and, eventually, lower inflation.
One focus is whether the banking sector, rattled by the failures of the three regional lenders and facing the fastest rate increases since the 1980s, would crack down so hard on lending that the economy spun into a recession. Recent data and survey responses also have pointed away from the harshest outcomes. Bank lending dipped about 1.7% in the two weeks following SVB's collapse, but has risen since then and recouped about a third of the decline.
In response to special questions tailored to the current climate, loan officers saw continued credit tightening through this year, particularly for commercial real estate loans, and declining demand for a broad swath of lending.
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