of what we have done, but i wanted to briefly discuss the lending guidance the federal reserve issued in collaboration with the other regulators : in november 2008, regulators issued guidance stressing the importance of continuing to make prudent loans to creditworthy customers. 1 in october 2009, the agencies issued guidance covering commercial real estate ( cre ) loans and workouts. 2 and in february of this year, we issued guidance regarding loans to small businesses. 3 all three pieces of guidance are intended to be accessible and easy to use by both banks and examiners and to provide clarity and consistency about the supervisory treatment of new loans, problem loans, and different loan workout approaches. in particular, the cre guidance includes a number of examples drawn from common loan situations and specifies classification treatment for alternate scenarios that depend on actions taken by the bank and the borrower. to test my understanding of the specifics and to be sure our intentions were clearly communicated, as we were finalizing the guidance, i sat down with our supervision staff and went through each of the examples just as if we were in a loan closing conference. importantly, at the federal reserve we have complemented these issuances with training programs for examiners and outreach to the banking industry to underscore the importance of sound lending practices. in january, federal reserve staff instituted a systemwide examiner training initiative that is reaching federal reserve and state examiners all across the united states, including approximately 100 examiners from ohio. in addition, in may more than 1, 400 bankers and state bank commissioners from across the country participated in an “ ask the fed ” conference call to discuss cre - related issues, such as credit workouts and troubled debt restructurings. the session was an effective way of helping clarify the guidance and helped us hear more about concerns people in the industry have. the federal reserve is also working to develop better ways to measure the effectiveness of the lending guidance we have issued. after all, if these sorts of issuances don ’ t work, we need to know that so we can figure out a better way to get our messages across. before issuing the cre guidance last year, federal reserve staff surveyed examiners to gain a better understanding of the banks ’ workout practices. that information is serving as a baseline for assessing the impact of the supervisory guidance. we also are asking examiners to capture, where possible, information on troubled debt restructurings and other types of loan workouts and dispositions as part of the ongoing examination process

credit, they don ’ t divide themselves into creditworthy or not. and borrowers look for the supply of loans on terms that they want. sticker shock over terms leads them to believe credit is not available. as the financial crisis unfolded and liquidity dried up, consumers and businesses alike found themselves facing two very different problems. first, many found themselves unable to make payments on existing debt due to reduced income or reduced asset values. in some cases repayment plans had been predicated on earnings, employment, asset sale, or refinancing expectations that suddenly seemed unlikely. the second problem encountered by a number of consumers and businesses was a reduction in their access to credit. many received notice that their lines of credit had been cut or canceled, or found that changing standards meant they were no longer eligible for credit at all. those who did still qualify for credit found it to be on much stricter terms and at higher rates than they expected. in some cases, they deemed the terms so onerous that they declined the credit that was offered. in response to the changes in credit availability as well as in their individual circumstances, businesses and consumers stopped spending and hunkered down. as businesses reduced inventory levels and capital spending during the past few years, they tended to pay down debt and build cash positions, meaning they have less need to borrow. many consumers are in the same boat – the personal saving rate, for example, is far higher than it was in the years preceding the crisis. in response to questions in the federal reserve ’ s survey of senior loan officers, banks have continued to report weaker borrower demand for mortgages and for consumer loans. but demand for business loans may be improving. when asked if they had seen an increase in inquiries about new credit lines or increases in credit lines from potential business borrowers, the percentage of banks reporting increased inquiries rose to 18. 2 percent in the april survey from 10. 5 percent in the survey taken in october 2009, while the percentage of banks reporting decreased inquiries declined to 16. 3 percent in april from 35. 1 percent in october. 4 consumers just looking at the statistics, it is not hard to construct a scenario in which consumer demand for credit remains sluggish for quite a while. during the crisis, household net worth declined about 25 percent from peak to trough. 5 although some net worth was restored as stock see http : / / www. federalreserve. gov / boarddocs / snloansurvey