Tuesday, February 17, 2009

Treasury Releases Depressing Monthly Lending Numbers

The Treasury just released its first monthly lending snapshot for the banks which are on the federal dole. I don't have a link at present, which is probably just as well because it is depressing and not worth dwelling on before dinner.

Here are the "highlights": banks are lending! Sort of.

Despite significant headwinds posed by unprecedented financial market crisis and economic turn, banks continued to originate, refinance and renew loans. [emphasis in original]
Great! But......

Significant challenges facing both banks and consumers that impact demand for and extension of credit include the shut down of various credit markets and the process of loan securitization.
Surely that has to be the end of the bad news. No... wait, there's more..

Due to decreasing loan demand and tighter underwriting standards, as well as other factors such as charge-offs, or losses written off on loans, banks reported a general trend of modestly declining total loan balances. [Emphasis in original]
So they're still lending! Just lending less. There's more:

a.From October to December, total residential mortgage balances across the twenty banks was essentially flat. The median percent change in total residential mortgage balances was a decrease of 1 percent.
Ok, that sucks. And so it goes. Corporate loan balances down, and now this goody:

c.Credit card borrowing increased, while available credit decreased. The median percent change in average total loan balance for U.S. credit cards was an increase of 2 percent. The median percent change in total used and unused commitments for U.S. credit cards was essentially flat. For banks with the largest credit card loan balances, the decrease was more marked.
Wow! Wonderful! An area of prosperity: usurious loans to the poor, though banks are cutting back on that too. What a great economy we have.

© 2009 Gary Weiss. All rights reserved.

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