Excerpt from Obama’s Address to the Nation:

The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.

You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.

But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.

Responding to the meltdown in the financial marketplace, financial institutions are reeling in credit lines and requiring borrowers to meet stringent credit standards.  Consumers also face higher prices, fewer choices and less competition as banks continue to consolidate.

Now, more than ever, Americans need continued access to small-denomination, short-term credit. 

Despite the turmoil, the payday lending industry continues to assume all fiscal risk and provide access to credit to millions of middle-income consumers. The rates and requirements remain the same. Payday lenders require no collateral on the small-denomination loans and do not report to credit agencies, yet customers continue to meet their obligations and repay when due. The payday lending industry remains sustainable and operational, except in states where annual interest rate caps preclude viability.    

The Wall Street Journal reports:

In some cases, banks’ former darlings — consumers who paid consistently and on time but let their balances ride — now are being hit hardest, asked to stomach higher interest rates and fees or try their luck with different card issuers.

This story is becoming all too common.  Credit card companies are looking at the numbers from Wall Street, the rising number of people without work and getting worried that people will begin to rely too heavily on the credit they’ve extended and be unable to pay it back.  This applies even to good customers, ones that have been paying more than the minimum every month.  The government isn’t the only entity that can limit credit options and with the policy actions we’ve seen against payday lending across the country, combined with more stringent requirements for long term loans and credit card companies reeling it in, consumers are going to find it more difficult to get credit when they need it most.

The Canton (Ohio) Observer is soliciting your stories here.

TIME magazine reports that the credit crunch is moving from Wall Street to Main Street, so this pundit wants to know, how is it affecting you, loyal reader?  Do you live in a state that already limits payday lending or in Ohio, Arizona, Illinois or other city that is considering new regulations?  Do you use payday loans or do you just like having the option if you needed it? 

Car loans are now harder to get because of of the credit crunch.   According to this story in the Tennessean, lenders are asking for higher downpayments, conducting tougher credit checks, and in general, making it tougher for consumers to get car loans.