May 5, 2008 BBJ: Bad loans at local banks Play video

(NECN) - It is getting tougher to get a mortgage or loan. The Federal Reserve says two-thirds of banks have tightened their lending standards in response to the credit crisis. As losses mount up, banks are increasingly reluctant to make loans.

Last week, the Central Bank upped its cash auctions to banks, and cut a key interest rate to try and lower borrowing costs for consumers. It is encouraging banks to keep lending and to guard against the threat of a deep recession.

Local banks are feeling the sting of the worsening economy. Bad loans are piling up as bankruptcy filings increase and the real estate market softens.

Boston Business Journal Editor George Donnelly has more.