Lending Drops at Big U.S. Banks

Lending at many of the nation's largest banks fell in recent months, even after they received $148 billion in taxpayer capital that was intended to help the economy by making loans more readily available.

Ten of the 13 big beneficiaries of the Treasury Department's Troubled Asset Relief Program, or TARP, saw their outstanding loan balances decline by a total of about $46 billion, or 1.4%, between the third and fourth quarters of 2008, according to a Wall Street Journal analysis of banks that recently announced their quarterly results.

Those 13 banks have collected the lion's share of the roughly $200 billion the government has doled out since TARP was launched last October to stabilize financial institutions. Banks reporting declines in outstanding loans range from giants Bank of America Corp. and Citigroup Inc., each of which got $45 billion from the government; to smaller, regional institutions. Just three of the banks reported growth in their loan portfolios.

Bankers say it is unfair to expect them to funnel a large portion of their government capital into loans so soon after receiving it. They say it takes time to make prudent loans and to attract new deposits that will allow them to lend out their new capital efficiently.



Ahhh isn't that why they got the money? I'm not saying dole out the money to bad loans but really now 90% of the loans were given to good people under bad pretenses. Yes the people getting the loans should have been abit smarter about what they were signing but thats the crappy part about wanting the new house car or whatever. You got a salesman telling you that they have looked at your income and debt out look and tell you that you can affored that ARM morgage thats at 5.5 now and you got nothing to worry about. Then two years later your ARM is now 8.2 your payment has almost doubled. Yes the people were wrong in signing that deal but that doesn't make them a bad loan risk. If the loan was a 40 year fixed at 5.5 and they signed that then 90% of the problem wouldn't be going on now.

Very simple thing the banks got OUR taxpayer money now take that money and go to the people that defaulted or are about to and redue the loan as a fixed rate. They got the bailout money to cover their loss so what more do they have to lose?