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: lending criteria. According to the Office of the Comptroller of the Currency, large American banks tightened credit standards for the first time in four years in 2007-08. But tighter credit is making life harder for existing borrowers.

This problem is more widespread in Britain, where variable-rate mortgages have always been more common than in America (even if fixed-rate mortgages have made up ground since the last big property slump in the early 1990s). Analysts at Morgan Stanley reckon that 23% of the total stock of British mortgages by value is due to reset in 2008, against a mere 4% of stock in America last year. But the effects are more acute in America, where higher rates have savaged risky borrowers, who make up more of the market than ever before.

It does not help matters that record fuel costs are also guzzling more of consumers’ disposable income—some think that car-loan defaults may grow as drivers decide to throw their car keys in the same dustbin as their house keys. Inflationary worries are expected to send interest rates higher again (which has also muted hopes of an earnings boost from a steeper yield curve, the difference between long- and short-term interest rates).

It is not in banks’ interests to send their borrowers to the wall, of course, but their ability to be flexible is more limited because of the credit crunch. Higher financing costs on the interbank market make it harder for them to be accommodating to customers. And untapped loan commitments to corporate customers continue to crowd out space on banks’ balance-sheets. Analysts at Citigroup reckon that there is a $6 trillion overhang of committed lending facilities to be drawn down, most of it at more generous terms than borrowers could get now. Bankers report that corporate customers, who know a good thing when they see it, are not interested in refinancing. Lenient loan terms will soften default rates among companies, which are nevertheless expected to rise sharply, but the cost may well be even more abrupt tightening in consumer lending.

Blame the beancounters