Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, August 28, 1993                   TAG: 9308280022
SECTION: BUSINESS                    PAGE: A6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

FED: CREDIT IS STILL CRUNCHED

"Thus far, it appears that the program has had little effect on lending," the Fed said in its quarterly survey of lending conditions.

However, "respondents expect that it will allow some easing on terms and standards for loans . . . when fully implemented," it said.

At a White House ceremony in March, Clinton unveiled a loan-stimulating package of regulatory changes, promising "billions of dollars of economic stimulus that doesn't cost the taxpayers one red cent."

But, the Fed said, "the survey responses suggest that the [program] has not had a substantial effect on the supply of credit to small and medium-sized businesses."

The Fed surveyed senior loan officers at 60 large banks.

A key part of the package of regulatory changes announced by Clinton encourages banks to make more so-called "character loans." These loans are based more on borrowers' business reputations rather than their balance sheets, and banks are allowed to make them with a minimum of paperwork.

However, the Fed found that only four banks, of 48 eligible, had begun a character loan program. Seven others are setting up programs. Lending varied widely among the four banks, which so far have made around 2,000 loans totaling $140 million.

"The banks pointed out, however, that they would have made most of these loans even in the absence of a minimal-documentation program," the Fed said.

Overall, the Fed survey, which had last been issued in May, found that credit conditions were improving without the Clinton program for all categories of loans except those for commercial real estate.

Banks have eased their terms and standards for loans and credit demand was stronger among both households and businesses.