Banks continued to tighten lending standards for businesses and consumers over the past three months, the Federal Reserve’s latest survey of loan officers showed. But a smaller fraction of banks were making it harder to get loans, an encouraging sign the grip of the credit crunch may soon be easing.
About 15% of banks, on net, said they imposed stricter standards on business loans to firms of all sizes, a smaller fraction than those who said the same in July. They cited a reduced tolerance for risk, an uncertain or unfavorable …

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street’s pay culture.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.

Deteriorating loan portfolios and stricter regulation could choke off lending just as the recovery is getting started.
Judging from the rally in bank stocks these last six months, confidence has come back to the financial sector. Or is it merely the eye of the credit hurricane?
Many banks have turned profitable again this year after several quarters of losses, and that trend is expected to continue as third-quarter earnings reporting season begins this week. Big Wall Street firms JPMorgan Chase ( JPM – news …

The Nobel Prize winning economist, Joseph Stiglitz has grave warnings for the U.S. in the midst of what is the worst economic down-turn since the Great Depression. The massive blank check bailouts have failed to fix the underlying problems of the banking system. Stiglitz – “In the U.S. and many other countries, the too-big-to-fail banks have become even bigger.” “The problems are worse than they were in 2007 before the crisis.”