New loans made by the nine U.S. banks with the largest unsettled government bailouts declined 35 percent from December to January, according to federal data released this week.[IMAGE]
The ""Treasury's monthly lending survey"":http://www.financialstability.gov/docs/surveys/SnapshotAnalysisJanuary%202010.pdf of the top Troubled Asset Relief Program (TARP) recipients with funds outstanding shows that collectively the nine banks in the upper echelon originated approximately $36 billion in new loans during the first month of this year.
It was the smallest total since last October, when administration officials reported originations of $41.6 billion. Treasury said the decline may be partially explained by large increases in originations from November to December 2009.[COLUMN_BREAK]
Credit extended by the nine lenders for real estate loans dropped in all categories. Residential home purchase originations plummeted 41 percent, while mortgage refinancings fell 17 percent and secondary home equity loans tumbled 22 percent. Respondents noted that the pool of qualified home equity borrowers has declined as home values have depreciated, noting that demand for such loans remains below 2008 levels.
Treasury said in its report that demand for new commercial real estate (CRE) loans remains low due to the lack of new construction activity. Real estate developers are reluctant to begin new projects or purchase existing projects under current economic conditions, which include a surplus of office space as firms downsize and vacancies rise.
According to the Treasury report, many respondents noted that their focus in the CRE sector has been on renewing and restructuring existing loans as opposed to making new commitments, but both areas suffered considerable declines. Total renewals of existing CRE accounts by the banks surveyed decreased 56 percent from December to January. Total new CRE commitments plummeted 61 percent.
The Treasury's January lending survey includes data from Citigroup, Comerica, Fifth Third, Hartford, Keycorp, Marshall & Ilsley, PNC, Regions, and SunTrust. According to the report, CIT Group did not file January 2010 data as a result of ongoing bankruptcy proceedings.