Another Monthly Drop In Lending By Biggest Bailed-Out Banks

The biggest recipients of taxpayer bailouts cut lending again, at a rate twice that of smaller lenders, new federal data show.

The nation's biggest banks that still owe taxpayers for the extraordinary support they were given in 2008 cut lending by about $9 billion from February to March, or one percent, according to a new report by the Treasury Department.

Smaller banks that took TARP money cut their lending by $4.1 billion, or just under half a percentage point.

The decline in lending was even more pronounced in consumer loans: community lenders cut lending to consumers and households by about $1.2 billion, or about 0.43 percentage point, month over month.

The six biggest banks that have yet to repay their TARP money cut consumer lending by just under $9 billion, or 1.6 percent, Treasury data show.

A list of the biggest banks and the amount they still owe:

• Citigroup: $25 billion
• SunTrust: $4.9 billion
• Regions Financial Corp.: $3.5 billion
• Fifth Third Bancorp: $3.4 billion
• KeyCorp: $2.5 billion
• Marshall & Ilsley: $1.7 billion

New small business loans, however, were a bright spot among the big regional lenders.

Fifth Third increased its share of new small business loans from $246 million to $372 million from February to March, a jump of 51 percent.

KeyCorp increased its small business originations by $20 million, also a 51 percent increase.

And new small business lending at Regions jumped 24 percent, from $487 million to $606 million.

Increasing small business lending is a key priority for the Obama administration, as small businesses depend heavily on bank credit in order to finance their firms. Small businesses -- and the jobs policymakers hope they'll create -- will be key to the recovery, lawmakers, administration officials and analysts say.

Comments

[research]

09:23 PM on 05/22/2010

Isn't it clear, that

every second bankers and brokers spend thinking about derivatives,

is a second they did not spend thinking about Main Street.

Every penny invested in derivatives,

is a penny Main Street did not get.

Outlaw all derivatives, force investment back to main street.

Make Main Street investments, the way you hedges your bets.

That will rescue the economy as it has before. FDR was correct.

[mountainweb]

12:57 PM on 05/22/2010

The big banks, BOA, Citi, etc. are on a screw the customer campaign. Sadly, the current obama administration is in bed with them....

[njposter40]

10:17 AM on 05/21/2010

Who is there to lend to? Businesses are shrinking their debt/loans to weather the economic storm and there are not a lot of qualified homebuyers left.

[suzc]

09:03 AM on 05/21/2010

I was interested in seeing SunTrust on the list. They are cheats and thieves of the first order! They STILL owe me money, on money they took from my bank account without authority. And it was almost impossible to find anyone in charge! I ended up sending certified letters to 12 different offices in 12 different states. No wonder they're rich. They steal with abandon! I reported them to my AG for predatory lending practices.

[wassilij]

07:42 AM on 05/21/2010

JYF!!!

http://www.youtube.com/watch?v=yge311sFhC8

[nexxtep54]

08:14 PM on 05/20/2010

This may be a dumb question, but what is to stop the Federal Government from getting into the loans business?

[hrpmap]

10:23 PM on 05/20/2010

Apparently nothing, not even the constitution. Don't you know that the HCB included the government takeover of studant loans, that they (studant loans) are now a profit center for the gov? The gov also gives public money away as grants for free. Now why did I mention the constitution? Because nowhere does ti authorize the gov to give public monies away or too become a banker. They are authorized to borrow money and pay debts, nothing more.

[unionave]

06:07 AM on 05/21/2010

One of the better economies is North Dakota . Many years ago that State begin banking and when the rest of the nation fell in to this deep hole N.D. continued on as if nothing happened . The people of other States could do the same thing . The biggest problem is allowing the Big Retailers in to communities to drain away much of the local currency in circulation . And as long as our communities continue to allow them in the local banks will continue to fail . And when all the local banks have disappeared guess where we will have to bank .

[mrspiffy]

12:11 PM on 05/20/2010

Use smaller banks where you have to go inside an office and talk to people.
http://yieldpig.blogspot.com/

[guveqzero]

12:04 PM on 05/20/2010

The whole tarp plan became junk when these banks were allowed to pay back the loans as soon as possible. The first thing the banks do is reduce lending, beef up collections, make trading bets and sell assets. That's what happened, and our Ivy league educated leaders didn't realize or recognize the folly. And, they still deny the consequences of early repayment. These folks did nothing for our economy but put us into waiting for something better. So, what will save our economy now? I'm tired of waiting for the marines to land and save us from ourselves.

[Mafdet]

11:29 AM on 05/20/2010

An improvement in lending to new small businesses. WHAT ABOUT EXISTING SMALL BUSINESSES?

For a new small business to get a loan, its owner has to offer his home as collateral. Since homes aren't worth anything these days, the recipient of these start-up business loans will be people who own their homes outright, and have now placed them at risk. For people who have opened businesses that have any kind of overhead - production equipment and employees - when they have completed a couple of business cycles and find that they have to grow or perish, they will go back to the bank for operating cash and if things have not changed by then, they will be shut out by the bank because they will have no more collateral to post and they will be told that neither their business assets nor their receivables qualify them for loans under the current underwriting rules.

But this new business lending has probably NOT been made to start-ups that expect to employ people. They have probably been made to consulting firms or Beltway Bandits, who act as fronts for big business cashing in on the SBA money that established small businesses can't qualify for right now.

[cureeous]

10:29 AM on 05/22/2010

Ugh.. been thinking about starting a business and was encouraged about the improvement in lending to small business - maybe my encouragement was a little premature. Good point... what about lending to existing businesses or start ups a few business cycles down the road - not looking good.

[Stencil]

11:18 AM on 05/20/2010

Remember that Bugs Bunny cartoon, "One for you and one for me, two for you and one two for me, three for you and one, two, three for me. Duh hey boss what about me? Oh yes, one for you and one, two, three, four for me."

What's up doc?

[Twayn]

11:08 AM on 05/20/2010

TARP has proven to be a success for banks, and a failure for the public. TARP was intended to restore liquidity to the frozen credit markets with a big influx of cash to cover the lost assets that were pulled out of the financial markets by mostly foreign investors. That run on assets was what set off the whole debacle and had Paulson telling Bush and Congressional leaders that if they didn't replace those assets the economoy would fall. But they gave the banks $700 billion dollars with virtually no strings attached - no requirement that they start lending again. So instead of lending, the banks used their TARP cash plus 1-0% loans from the Fed to trade currencies and commodities and derivatives, etc. Once their own balance sheets were propped up with our money covering their toxic assets, the banks continued using our money to return to profitability, still refusing to lend because they can make more money at the casino than they can investing in businesses and the American people. The TBTF banks are parasites, sucking the vitality out of the economy. Goldman Sachs is probably the worst. I'm no financier, but when I see that in Q1 seven of the top nine trades GS recommended to clients lost money, yet they had a perfect recording with their own trades (profitable on every single trading day), I can smell the stink of corruption and fraud.

[suzc]

09:07 AM on 05/21/2010

TARP was intended to save billionaires! Screw the rest of us!

[Carl Caroli]

10:54 AM on 05/20/2010

Bust them up!

[SUPPERMAN]

10:50 AM on 05/20/2010

I love my credit union!

[sonofsamphm1c]

10:28 AM on 05/20/2010

Of course they cut lending again. They're getting ready to move operations to other countries.

[ThePeacemakers]

06:40 PM on 05/21/2010

Like they haven't been doing that ALREADY?

[DavidWyld]

09:29 AM on 05/20/2010

This can be corrected by consumers themselves. Yes, fight the power. Abandon the big banks and move your money to smaller, community banks and credit unions that are making loans (See http://www.moveyourmoney.com).

David http://wyld-about-money.blogspot.com/