The Federal Reserve's most recent Survey of Senior Loan Officers hit the street yesterday, and the responses were generally consistent with some slight softening in the pace of economic activity. Nothing too scary, though. There was confirmation that, yes just maybe, the housing boom is no longer so booming, and that consumer spending may be following the same track:
Significant net fractions of domestic banks reported that, since the last survey, demand for mortgages to purchase homes was weaker as was demand for consumer loans...
Demand for consumer loans reportedly had weakened further over the past three months: About 30 percent of domestic banks, on net, saw weaker demand for such loans, up from about one-fifth in the October survey.
At the same time, there was not much ado about the recent changes in bankruptcy law...
Among banks that experienced an increase in credit card charge-offs in the fourth quarter of 2005 as a result of the introduction of the new bankruptcy law, about three-quarters indicated that less than 40 percent of fourth-quarter charge-offs were attributable to this increase. In addition, banks accounting for more than one-half of credit card loans on respondents' books at the end of the third quarter reported that between 60 percent and 100 percent of the increase in the fourth-quarter charge-offs that reflected the introduction of the new law was attributable to households or individuals who would have filed for bankruptcy anyway later in 2005 or during 2006.
... and, perhaps not surprisingly, lenders do not seem too worried about the financial health of their borrowers:
A final set of special questions asked banks about their expectations for the behavior of delinquencies and charge-offs on loans to businesses and households in 2006 under the assumption that economic activity progresses in line with consensus forecasts. On balance, the responses suggest that banks expect some modest deterioration in loan quality this year from recent very high levels.
Emphasis added.