By Jill Fraser for Lending Central

US President Barack Obama announced today his proposal to limit the size and scope of America’s largest and most powerful financial institutions.

Obama, who has just entered his second year of office, spelt out changes that would prohibit banks and bank holding companies from owning or sponsoring a hedge fund or private equity fund and from participating in proprietary trading.

Declaring that America’s biggest banks had almost brought the economy to its knees by taking “huge, reckless risks in pursuit of quick profits and massive bonuses”, Obama says he wants “simple” and “commonsense” reforms.

Referred to by many as a vote-winning populist move, ABC’s AM reporter, Kim Landers describes it as “the latest attempt by the White House to harness popular anger at massive Wall Street bonuses and tight credit markets, as Congress heads to a crucial election year”.
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The flow of credit for housing is now running $6.2 billion per month faster than it was a year ago, when the global financial crisis was hitting hardest.

Approvals for housing finance hit $23.847 billion per month in September, a level exceeded only on one previous occasion, in June 2007.

That was the month the sub-prime loans crisis really hit the headlines with the failure of two hedge funds run by Bear Stearns, which subsequently dragged the US investment bank to the brink of collapse the March, when it was snapped up for a pittance by JPMorgan Chase.

The low point for housing lending in Australia was reached in September 2008, when the better-known failure of Lehman Brothers pushed the world’s financial system to the brink.

In that month, the value of housing finance approved dropped to $17.616 billion, its lowest for two years.
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Increasing numbers of mortgage holders are refinancing to make improvements to their properties, according to a leading mortgage broker.

Loan Market Group Executive Director John Kolenda said home owners were looking to borrow amounts of between $20,000 and $100,000 for renovations.

“We are getting a significant increase, as much as 50 per cent in some areas, in the number of people seeking to refinance to do minor home improvements,” Mr Kolenda said.
“It’s the major trend we have noticed in recent months as activity in the residential property market has slowed slightly during the winter.”

Mr Kolenda said home owners making improvements to their properties now could be looking to sell when the residential real estate market picks up, with spring traditionally a popular time for vendors to put properties up for sale.
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Small businesses have complained banks aren’t lending enough and that the price is too high, while banks say they are lending more than ever before at fair price, Small Business Minister Craig Emerson says.

Mr Emerson has convened a roundtable to discuss small business access to credit during the global financial crisis, to be held in Melbourne on Friday.

Mr Emerson said small businesses complained that there wasn’t enough money available from banks and the cost of available finance was too high.
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Further interest rate cuts and falling petrol petrol prices should help kick-start a weak market for lending finance, an economist says.

The value of personal and commercial commitments fell in October, Australian Bureau of Statistics (ABS) figures issued on Monday show.

Lending for personal purposes fell 2.1 per cent in October, while commercial financing was three per cent lower for the month.
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Further aggressive interest rate cuts are needed to halt a sharp decline in lending, an economist says.

The value of new loans approved dropped to a three-year low in August after declining for a seventh straight month, according to figures from the Australian Bureau of Statistics (ABS).

Total lending commitments by value were 30.5 per cent lower than a year ago, the largest annual fall in the 33-year-old history of the survey.

It was also the largest ever decline in commercial lending, which slipped 36.9 per cent in the year to August.
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Australia’s appetite for credit continues to wane following interest rate hikes earlier this year, with the housing sector taking a big hit.

Credit figures released today by the Reserve Bank of Australia (RBA) reinforce signs of slowing in the economy and the likelihood of that official interest rates could be cut a number of times in the coming months.

Lending for housing, personal use and business rose 0.5 per cent in July, and was up 11.2 per cent in the year.
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