Letters of credit (L/Cs) to secure loans for municipal projects in the US are still hard to come by according to officials in Milwaukee.

They say the city had to work hard to overturn an initial bank refusal to issue such an L/C, and the lack of L/Cs is hampering economic recovery.

Under pressure

The city's Redevelopment Authority reportedly asked JPMorgan Chase Bank to renew a L/C that helped to secure a US$25 million loan secured in 2002 to build a car park.

Bank officials initially rejected the request, only changing their minds after some high-level phone calls and the city agreeing to pay a higher fee.

Reluctant banks

"A lot of larger [financial] institutions are trying to back out of L/Cs, whether it's a solid project or not," Craig Kammholz of the city comptroller's office reportedly said.

Jim Scherer of the Department of City Development reckons banks are not granting enough loans to enable the economy recover.

"We are running into roadblocks all over the place," he told local media.

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