IDENTIFYING CREDIT CRUNCHES

This article identifies four U.S. credit crunches-periods of sharply increased nonprice credit rationing-between 1960 and 1992. Extreme intimidation of banks by the Federal Reserve and U.S. federal government through jawboning and credible threats of increased regulatory oversight caused the crunches 1966 and 1969. Thus, this article overturns the conventional wisdom that Regulation Q produced the 1960s credit crunches. The 1980 crunch was the unintended effect of direct regulatory limits on credit extensions. More recently, a market-induced crunch occurred from early 1990 through 1992 when a collapse 4 commercial real estate values made pricing risk on real estate-collateralized loans extremely difficult.