As banks rush to change their lending rules, experts expect it to become nearly impossible to get a cheap unsecured loan in the near future. Banks are having problems with liquidity and after Bear Stearns announcement, investors are even less certain about investing in mortgages and banks. This means that the availability of cheap unsecured loans, particularly at competitive rates will be history for the next few years.
“We could be in this bad economy for all of 2008 and into 2009,” said economist Ken Goldstein of the Conference Board, a New York research group funded by major corporations. “It certainly is dark out there. There are storm clouds. But the sky is not falling in.”
Goldstein pointed out that investors are “running scared” simply because of the amount of money that is currently being lost. When previously solid companies right off more than $2 billion in bad debt, it makes everyone shaky and smart investors are deciding that they just don’t want to take that risk. For banks to offer cheap unsecured loans on a widespread basis, experts feel that major changes are going to need to take place in the economy.
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