That will cause some excess stress. The environment is quite different from the last time the nation's lenders doubled up on antacids. Today, banks are well capitalized and have ample reserves to cover long losses. At issue is risk. Nonconforming loans and personal bankruptcies, both up sharply, are worrisome signs to lenders.
Banks still remain willing to provide credit but are pricing the loans to reflect the risk.
If you're a AAA credit, you're still going to pay a very low rate. However, if you are high risk, you're probably going to pay a little bit more to get that loan. It's just being prudent. This is prudent management of risk. The scorecards are a little more conservative just because they are scorecards.