Bank Lending Still Down 23% 4 Months After Bailout

Journal says Treasury's tally hides damage
By Rob Quinn,  Newser Staff
Posted Apr 20, 2009 8:28 AM CDT
Bank Lending Still Down 23% 4 Months After Bailout
New figures show that bank lending has fallen despite government efforts to unfreeze credit markets.   (Shutter Stock)

Banks that received taxpayer aid to restart lending are loaning less than they did before the bailout, a Wall Street Journal analysis finds. The most recent figures available, from February, show a 23% drop in new loans from the lending level in October, when the Treasury Department kicked off TARP, the Journal notes. The figures are a more alarming and possibly more accurate measure than those the Treasury uses.

The Treasury—which recently touted "relatively steady overall lending levels"—uses median figures, a method some experts believe is understating the true drop in lending, at a time when skepticism on the bailout is soaring. The sum of all new loans was down in three of the four months since TARP kicked off, the Journal analysis finds, and all but three of the 19 largest banks for which figures were available showed lending down since they received the funding. The banks, meanwhile, say they're eager to start lending again but the demand has failed to materialize. (More lending practices stories.)

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