Bank Lending Practices in the Post-2008 Financial Crisis

Since the 2008-2009 financial crisis, U.S. bank lending has been slow to recover and the current loan growth recovery has lagged the recovery experienced in previous recessions. Under the auspices of the Congressional Research Service, the Capstone team was tasked with investigating how domestic lending practices have changed after the 2008-2009 financial crisis and the underlying reasons for such changes. Their mission was to interview banks from across the country and to identify changes in the amount and composition of lending, along with what factors most affected changes in lending practices. Embedded in the project was whether any new legislation was hindering recovery of loan growth.

The final report uncovered that the weak economic environment and regulations aimed at the too-big-to-fail institutions, but being broadly applied across the banking industry, may adversely affect the smaller banks and the average retail consumer, who may find it more difficult to access financing. This has broader implications for the overall recovery of the U.S. economy.