There’s
been some buzz recently about a pick-up in business lending. The six
largest banks increased business loans at an average annual rate of 8.5%
in the first quarter, according to a Wall Street Journal report last week. Other first quarter data reported by the Fed shows
commercial and industrial loans jumping 12% from last year. Charles
Schwab’s chief strategist went so far as to call a chart depicting the
Fed’s broader lending data “the most important chart in the world.”
Unlike
some pundits, though, we’re not convinced that a surge in business
credit is such a good thing. We don’t doubt that more lending to small
businesses, in particular, might do some good if it doesn’t go too far.
Lending to large corporations, on the other hand, is a different story.
Corporations are already borrowing at a pace that’s only before been
seen near cyclical peaks:
Is it a crisis?
