The ""U.S. Department of the Treasury"":http://www.treasury.gov released its first monthly bank lending survey on Tuesday, showing that despite the negative effects of the economic downturn and unprecedented financial crisis, the top 20 banks receiving government funding have continued to originate, refinance, and renew loans.
The Treasury's report is designed to provide new, more frequent, and more accessible information on banks' lending activities to help taxpayers assess the lending and other activities of banks receiving government investments from its financial stability programs.
The Treasury noted that during the survey period, unemployment rose from 6.5 to 7.2 percent, more than 1.5 million jobs were lost, and real GDP decreased by 3.8 percent. Still, in the face of this severe economic deterioration, the Department said that lending levels held steady, largely because of the capital injections made to banking institutions. Approximately 400 banks in 47 states have received government aid since the Capital Purchase Program (CPP) began last October.
The report showed that overall, loan origination and underwriting activities were weak from October to November 2008, but picked up from November through December. The Treasury said the gain was fueled by falling mortgage interest rates and the Temporary Liquidity Guarantee Program implemented by the Federal Deposit Insurance Corporation (FDIC), which guarantees banks' unsecured debt and provides coverage for non-interest bearing deposits.
Over the period, the top 20 banks surveyed reported residential mortgage loan balances decreased by 1 percent. Corporate loan balances also decreased 1 percent, while the median change in loan balances for U.S. credit cards rose 2 percent, reflecting greater reliance on existing credit lines by consumers, the Treasury said. In commercial real estate, renewals of existing accounts increased 55 percent, while new commitments decreased 19 percent.
In summary, the Treasury said, ""Loan activity was resilient in the face of the worst economic downturn in decades.""
Treasury launched the monthly bank lending survey as part of its commitment to Congress and the public to improve communication and transparency about its programs to stabilize the financial system. The Department said the Financial Stability Plan announced by Secretary Timothy Geithner last week will further enhance the public's understanding of banks' lending by requiring recipients of government funds to show how the money they receive preserves or generates new lending and explain how they intend to use government assistance to strengthen their lending capacity.
To view the Treasury's monthly lending and intermediation snapshot ""click here"":http://www.treas.gov/press/releases/reports/tg30-2-122008.pdf. For individual banks' lending reports ""click here"":http://www.treas.gov/press/releases/reports/tg30-122008.pdf.