And as they do so, they are relaxing their lending terms and conditions, central-bank surveys show.
Its banks recently eased its lending terms, though, giving Goodyear some breathing room.
He noted that stricter lending terms are now even hampering creditworthy borrowers.
Mr Hirsch says there was a similar change in lending terms before the meltdown of 1998, though even then lenders earned much wider spreads.
Lending terms were restrictive, typically requiring full repayment within five years.
Meanwhile, the French finance ministry says that French banks and insurers have promised to give Greece easier lending terms on 15bn euros of bonds they hold.
And while "competition is heating up and lending terms have softened a bit, if you move away from prime lending areas, there is no competition, " he said.
Prime brokers, the arm of investment banks that deals directly with the hedge-fund sector, are imposing tougher lending terms to protect themselves against the risk of collapse.
If the loan comes apart, Mr Hirsch says, it will be because it can't, or won't, be repaid, not because bankers decide the lending terms are being broken.
Pakistan, negotiating new lending terms with the IMF, now estimates that economic growth will fall to 2% (or worse) of GDP this year, down from a predicted 4.5%.
The rate at which banks lend to each other has been rising, which has meant that banks are toughening up their lending terms even though official interest rates are falling.
This is risky, because they were borrowing on 1 and 7 day terms and lending the money out on 30 year terms.
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In his evidence to MPs, Mr Tucker also suggested "possible extensions" to the Funding for Lending scheme that he termed "quite significant, in terms of lending to non-banks and via non-banks".
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Lending on such terms is most popular in Austria, Britain and Italy (see chart).
Its most recent figures, released in August, show that though the number of banks easing lending standards and terms is still greater than the number tightening them, the gap between them is narrowing.
For example, in the latest Senior Loan Officer Opinion Survey conducted by the Federal Reserve, banks reported having further tightened their lending standards and terms for a broad range of loan types over the past three months.
What it means for the broader markets is a likely slowdown in buyout activity as the banks pull back from lending with easy terms and as buyout firms balk at paying higher interest rates to fund their purchases.
Banks are still skittish in terms of lending for fear of further defaults and also are required to keep higher capital levels to insure against further defaults.
Back then, private and government-backed lenders, convinced that home prices would never fall, were eager to help Americans achieve their dream of homeownership by lending on ever easier terms.
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Still, in terms of bank lending, Mexico still lags behind many of its peers in Latin America.
The answer is typically no, and some owners will cite Google's terms prohibiting the lending of Google Glass as an excuse.
The fund would provide capital to small banks on concessionary terms provided they expanded lending to small business.
The toxic correlation of sovereign and bank borrowing rates implies that the rise in government financing costs will be felt in terms of higher bank lending rates.
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Before the IMF resumes lending - a prerequisite, in practical terms, for Kenya to get money from anyone else - it also has to satisfy the international bodies that its anti-poverty strategies are up to speed.
In addition to the mortgage lending industry reform bill, they propose allowing loan terms to be adjusted in the event of a borrower's bankruptcy.
Dr. ANDERSON: Well, by reducing the interest rate and easing the repayment terms, this legislation might well make bank lending for student aid less profitable.
Another is that in the region's seven main economies, bank lending to the private sector fell by 20% in real terms between mid-1998 and October 2003.
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We sorely lack lending, and banks will not lend if they fear that the loan terms can be arbitrarily changed.
Greenwich sued in 1998 after Countrywide agreed to renegotiate the terms of mortgages as part of a settlement of predatory-lending charges by 11 state attorneys general.
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