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.