rssTreasury: Lending Down Among TARP Recipients
Tuesday, February 17, 2009 at 7:58 pm
- 5 Comments
A new report out of the Treasury Department Tuesday confirmed what many lawmakers, housing advocates, small businesses and individual consumers have known all along: That despite hundreds of billions of dollars flowing from Washington to the finance industry, bank lending among recipients of the Troubled Asset Relief Program fell in the last three months of 2008.
Among the 20 largest TARP recipients, median mortgage and business lending both fell by 1 percent over that span, Treasury found, while median credit card lending rose 2 percent, “reflecting greater reliance on existing credit lines by consumers.”
The findings were based on a survey of the 20 banks receiving the most federal help under the TARP, and mark the first in what will be a series of monthly reports analyzing the lending trends among bailed-out banks.
Not that those banks have been particularly forthright about where the money’s going if not toward lending. In December, The Associated Press asked the 21 top TARP recipients to specify how they’re using the funds. The AP reported Tuesday: “None would provide any specifics.”
The lack of transparency had led to charges that the banks were hoarding the TARP funds — a suspicion fueled by anecdote and outside analysis. As we wrote yesterday, there’s a great deal of temptation among TARP recipients to sit on the funding for the sake of shareholders rather than to lend it and risk the consequences of unstable markets. The Treasury’s new report confirms that was the case.
There is, however, one glimmer of hope. The Treasury report found that, while lending activity was “weak” in October and November, it picked up in December “fueled by falling mortgage interest rates.” That could spell good news for the crippled housing market — if only it would ever locate its bottom.
5 Comments
Comment posted February 18, 2009 @ 11:42 am
Your headline is misleading, and this is why the public becomes morose (and the Congress becomes even more rude than usual). The entire financial industry came to a standstill in the beginning of the quarter for a myriad of reasons (all of which you are familiar with)… but the CONCLUSION of the report was “In sum, loan activity was resilient in the face of the worst economic downturn in decades”… and THAT you chose to ignore. Yesterday, BofA made it's first dividend repayment on TARP funds… but you didn't note that either. I'm beginning to think that the press is like Limbaugh… that it's “more interesting” to say the worst…
Pingback posted February 18, 2009 @ 12:12 pm
[...] $787 billion fiscal stimulus package, Obama is turning his attention to the housing market, where Treasury: Lending Down Among TARP Recipients – washingtonindependent.com 02/18/2009 A new report out of the Treasury Department Tuesday [...]
Pingback posted February 18, 2009 @ 12:18 pm
[...] were told that bailout money was being given to banks so they could increase their lending? Yeah, that didn’t work out so well, according to the Treasury Department: Treasury: Lending Down Among TARP RecipientsA new report out of the Treasury Department Tuesday [...]
Comment posted February 18, 2009 @ 11:50 pm
The key graf is here:
Not that those banks have been particularly forthright about where the money’s going if not toward lending. In December, The Associated Press asked the 21 top TARP recipients to specify how they’re using the funds. The AP reported Tuesday: “None would provide any specifics.”
The fact is, the banks' balance sheets were a lot worse than they let on. They couldn't lend any more money or they'd have to admit they were insolvent from carrying too many toxic assets on their books. So they just hoarded it instead and hoped no-one would notice. Geitner and the people at the Fed and Treasury recognized this, which is why we're on to Phase II: simply taking them over and unwinding their (mostly worthless) assets in an orderly, bankruptcy-like fashion.
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.
