"The banks have apparently been discounting a bit in a competitive loan market as the prime escalated to its latest highs. But now, with a [half-point] drop in the prime, half of the Fed's new rate cut will go back to the banks when they return to their old pricing structure," says Tracy Lefteroff, who studies global private equity for PricewaterhouseCoopers.
MORE RELIEF, PLEASE. In the last quarter, 25% of companies surveyed completed new bank loans, paying 9.85% on average, vs. 8.57% a year ago. Some 26% of the CEOs taking part in the latest survey were concerned that lack of capital for expansion would limit growth in 2001 -- up from the 20% who expressed that fear a year ago.
The results suggest that despite Fed Chairman Alan Greenspan's dramatic move, borrowers aren't likely to get much of a break just yet. By Theresa Forsman in New York