Schenk to CNNMoney: Credit markets returning to normalcy

NEW YORK (5/14/09)--Retail sales' unexpected decline in April caused Treasury prices to rise Wednesday, and that may mean the credit market is returning to normalcy, said Mike Schenk, Credit Union National Association senior economist, in an interview with CNNMoney.com Wednesday.

The three-month Libor rate fell Tuesday to 0.88% from 0.91%. Last week, the three-month rate dropped below 1% for the first time since 1986, the year it began keeping records, said CNNMoney.com.

The decline in the three-month rate is "an indication that frozen credit markets are returning to normalcy," said Schenk.

"Bankers are more willing to lend, not only to each other, but to consumers as well," he told the publication. "The question is, are potential borrowers willing to borrow?"

Consumer confidence remains at historically low levels and unemployment has reached a 25-year high, suggesting that borrowing in the "real economy" is likely to remain depressed, said the article.

Still, lower bank lending rates are encouraging because, said Schenk, "the markets will probably recognize before consumers that things are getting better."

courtesy of cuna.org