Word: borrowings
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Dates: during 1970-1979
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Stretched Out. Savings and loan associations, which supply most of the nation's mortgage money, cannot compete with commercial banks for funds in an era of high interest; some are struggling just to survive. Banks themselves, though collecting handsome interest on loans, are being forced to borrow feverishly-from individual savers, the Federal Reserve, each other-to meet loan demand. Summing up the situation, George McKinney, senior vice president of New York's Irving Trust Co., says, "There is no question that the financial structure is stretched out. There's bound to be an adjustment, and inevitably...
Interest rates on car loans, vacation loans, personal loans and the like have always been high (up to an effective 18% or more), and most banks say that they are not turning away borrowers-at least, not those who have savings accounts at the bank from which they seek a loan. Still, some banks are tightening up their consumer-loan standards. In Atlanta, Trust Co. of Georgia has stopped making new revolving credit loans, the kind that enables a consumer to borrow up to a certain amount, repay part of the loan, then have the amount he has repaid become...
Fire Sale. Small businessmen who need to borrow to keep going at all are increasingly turning to underworld loan sharks for credit, reports Ralph Salerno, chief rackets investigator for the district attorney of Queens County in New York City. The "vigorish," or interest rate, on these loans makes the bank prime look like a fire-sale bargain: $300 on $1,000 borrowed for 13 weeks, or 120% a year; $150 a week on a $5,000 loan, or 156% a year. The loan sharks are sophisticated operators who keep close tab on the legitimate money markets and often cite...
...more subtle but very real threat is that companies will be unable to raise the vast sums of capital they will need to expand capacity so that they can relieve shortages of oil, steel, paper and other products. For that, corporations need not the short-term funds they can borrow at the bank prime but the long-term money raised by selling new issues of bonds or stock. But as towering interest rates make bond issues costly, they also depress the stock market by luring money away into such high-yielding investments as bank certificates of deposit. The Dow Jones...
...recent sharp plunge in some commodity prices. Wheat, for example, dropped from $6.11 per bushel in February to $3.62 last week, beef cattle from $46.25 per hundredweight to $38.90, and steel scrap from $115 per ton to $100. If these drops continue, economists believe, corporations will stop scrambling to borrow in order to stockpile raw materials. Indeed, they may sell off some of their present inventories and start repaying their loans...