)For the past several months, we’ve only been able to scrutinize the banking activity of the 21 largest banks in the country to tell us what financial institutions are doing with the billions of taxpayer dollars that they have received. For the first time, the Treasury Department has released numbers for all the banks that have received TARP money, not just the biggest banks. It turns out that the banks that have been bailed out by taxpayers are actually seeing their lending activity decline, even after receiving billions of dollars to spur lending activity.
The numbers are based on the month of March and encompass 500 financial institutions, all of which received TARP money. A total of $200 billion has been given to these banks over the past several months. Overall, lending activity in March declined almost 1% compared to a month earlier, even though March had 3 additional days compared to February.
Commercial loans were reduced by 1.5%, the largest decline of any lending category. Consumer loans were down about 0.5%, a number which includes student loans, credit card loans, and mortgages.
The release of these numbers is putting pressure on banks which now have to answer for why they have made credit harder to obtain even with adequate access to cash to lend. Banks, for their part, claim that they are just as eager to lend as they ever were, but that there is less demand for financing. This is especially true, they say, in commercial lending, where many project have been suspended or eliminated altogether in the wake of a sluggish economy.
The Treasury Department is likely to keep these numbers in the public eye in an effort to keep their commitment to transparency so that taxpayers can see how their dollars are being handled. Expect banks to pay off TARP loans as soon as they are able to, which will help them to operate without being monitored so closely by the public.
Popularity: 5% [?]
If you enjoyed this post, make sure you subscribe to my RSS feed!related credit loan blog articles
