Wednesday, April 27, 2011

Bank lending update

It's been a few months since I last highlighted total bank lending but not much has changed since late October. Just to make sure you don't think I forgot here's an update.

Total bank loans and leases as per the Fed continues its steady decline economic recovery notwithstanding.  As you can see there was a large recent spike but this was due to an accounting change in bank's loans and not a sudden increase in lending.  This lack of new lending may be one reason broad money supply is so sluggish of late.

Like last update the banks are buying US Treasuries instead of lending. If you wondering who is buying those hated T bonds look to your corner mega-huge bank.   Considering their funding costs and capital requirements are pretty much zero you could say banks would rather just play golf and clip Treasury coupons.


  1. my friends that are still in their small businesses are all hanging by fingernails, hoping something will loosen up.....any signs of somemore slowdown, they are going to throw in the towel....q1 GDP wasn't strong.

  2. It's a tough market but we think it's bad then we see articles like the one on Zerohedge the other day about Chinese commodities buyers getting into the lending business via reverse cash and carry and charging small Chinese businessmen 17% and they think it's a great deal!

  3. @boatman -- I know what you mean. I have relatives in the home building supply business and as you can guess their business looks like Western Russia after the Germans retreated in WW II. Not much left. They have shrunk dramatically and are hanging on by their fingernails as well.

    @option -- Just goes to show you the Fed can QE all it wants. People don't want to borrow. Meanwhile the Chinese central bank is raising reserve requirements and Chinese are still desperate to borrow....