Although the stock market has rebounded after a record drop on news the U.S. House voted down a $700 billion rescue package Monday, banks are beginning to pull back their lending thresholds, potentially leaving many consumers and businesses without badly-needed credit.

Kinston accountant Will Barker said Tuesday the chaos in the nation's financial sector would not necessarily hurt individual credit scores, but those with worse credit ratings will have a much tougher time getting loans.

"Lending institutions have become much more careful over their lending practices, and it just makes it more difficult for small businesses to get loans," he explained.

The bailout was designed to give lenders, who have become overly cautious - even frozen in the wake of home loan defaults and recent bank failures - the confidence to extend loans again by having the federal government buy up billions' of dollars worth of bad debt, CNNMoney.com reported Tuesday.

Banks have sharply restricted the amount of credit they can extend to each other, which forces them to scale back who they can loan money to.

Barker said many businesses depend on lines of credit they can tap into at certain times when they need an infusion of cash. If they cannot access this credit, businesses must curtail their spending and could end up laying off workers.

Those business people include farmers, manufacturers and retailers, all of whom have a heavy presence in Lenoir County.

"The question is can business stay within where they're expected to go and unfortunately a lot of that hinges on the credit market," Barker said.

He compared trying to predict the effects of whether the rescue package dies or a revised version passes Congress to predicting the weather. No one quite knows what will happen.

"You're going to have a deeper, bigger impact if nothing is done currently but hopefully we'll be able to get out of it quicker," Barker said.

He added: "Those are theories that are out there; I don't think anybody knows exactly what's going to happen."

Barker cited the stock market as an example. The Dow Jones Industrial Average plunged nearly 800 points Monday after news of the bailout rejection broke. But, it had gained 485 points back by the time the markets closed Tuesday.

"If (the rescue plan) doesn't go through for another couple of weeks will the Dow drop another 700 points?" Barker asked. "Your guess is as good as mine."

He continued: "As long as there's talk about this rescue plan the stock market will be moving up and down."

David Anderson can be reached at (252) 559-1077 or danderson@freedomenc.com.