DEFINITION of Belt And Suspenders

Belt and suspenders is a term used to mean conservatism and safety in lending practices. Belt and suspenders has been used to describe cautious bankers who demand loan policies be very strictly adhered to. More generally — as the use of both a belt and suspenders to hold up one's pants implies — it can mean having redundant safety procedures in place to eliminate all risk. The term can be complimentary, but it also can convey ridicule of the overly conservative. In response to the 2008 financial crisis, many banks took on a belt and suspenders approach to lending.

BREAKING DOWN Belt And Suspenders

Belt and suspenders means an approach to lending practices that is extremely conservative. At times, maybe overly so. After the 2008 financial crisis when credit was extremely tight, many banks took a belt and suspenders approach in respect to screening potential borrowers. Potential borrowers had to jump through several hoops regarding income verification and payment reserve requirements in order to qualify for a loan. This was a pendulum swing in the opposite direction from the practices that contributed to the financial crisis, which included lending to people who couldn't afford to make payments.

In his book The Right Word in the Right Place at the Right Time (2004), William Safire cited several examples of the use of belt and suspenders. He notes a sentence in the Dallas Morning News from 1987: "To qualify for the Scott Burns Belts and Suspender Bank List, a bank had to have primary equity capital amounting to at least 10% of its assets." He also mentions a piece from the Wall Street Journal, in which Clinton policymaker Robert Rubin says "We'll be belts and suspenders with respect to those," regarding restrictions about lobbying the White House upon assuming his new banking job.