What Is the Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS)?
The Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) is a quarterly survey of up to 80 large domestic banks and 24 branches of international banks. Conducted by the Federal Reserve Board, the survey is completed in time to be discussed at Federal Open Market Committee (FOMC) meetings.
The FOMC uses the surveys to get a clearer picture of credit and lending, which can impact decisions on setting interest rates and discount rates. The survey often receives extensive coverage from the business press and in the academic community. In addition, the SLOOS is included in the Fed report to Congress on Availability of Credit to Small Businesses, which is produced every five years.
- The Senior Loan Officer Opinion Survey on Bank Lending Practices is a survey the Federal Reserve conducts to gain insight into bank lending practices and conditions.
- The voluntary survey polls up to 80 large domestic banks and 24 branches of international banks.
- The Fed is authorized to conduct the survey up to six times per year, although four surveys per year is typical.
Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) Works
The Senior Loan Officer Opinion Survey on Bank Lending Practices gathers information on how loan officers feel about recent and potential policy changes, the standards and terms of bank lending practices, the state of business and household demand for loans and other products, among other topics of current interest.
All topics discussed relate to both personal and commercial bank customers. For example, past surveys have focused on changes in the available lines of credit and the use of interest rate floors being set for floating rate loan agreements for businesses. For consumers, topics reflected issues such as loans in areas with falling energy prices and the impact of credit scores on credit card applications.
The Fed first began surveying banks and their lending practices in 1964. Over the decades, the survey has been adjusted, with the number of respondents decreasing. The Fed is authorized to conduct the survey up to six times per year. However, in most years there are just four surveys per year, though five were conducted in 2020.
Forbearance rate at many banks for residential and commercial mortgages secured by income-producing properties, according to the October 2020 SLOOS survey.
The current size and characteristics of the survey respondents have been in effect since 2012. Banks must have at least $2 billion in assets, of which commercial and industrial loans must represent less than 5% of those assets. Since the Fed aims for geographic diversity, between two and ten banks are included from each Federal Reserve District.
The survey generally includes 25 questions and a number of special questions about development in banking practices. They cover practices for the previous three months, but also deal with expectations for the coming quarter and year. While some queries are quantitative, most are qualitative.
The surveys have come to cover increasingly timely topics, for example, providing the Fed with insight into bank forbearance policies and trends in response to the 2020 economic crisis.
Real Life Example of Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS)
The January 2019 SLOOS addressed changes in the standards and terms on—and demand for—bank loans to businesses and households over the prior three months, which generally corresponds to the fourth quarter of 2018. Responses were received from 73 domestic banks and 22 foreign banks.
Regarding loans to businesses, respondents to the January 2019 survey indicated that, on balance, banks tightened their standards for commercial real estate, while terms for commercial and industrial loans were basically unchanged. Demand for business loans weakened.
Regarding consumer loans, credit card standards tightened. Otherwise, standards stayed the same for most residential real estate loans and consumer loans.
In looking at the year ahead, banks reported expecting to tighten standards for all categories of business loans—as well as credit card loans and jumbo mortgages—in anticipation a decline in the value of collateral. Demand for most loan types is expected to weaken as well.