The "Wall Street Journal" reports that "lending at many of the nation's largest banks fell in recent months, even after they received $148 billion in taxpayer capital that was intended to help the economy by making loans more readily available.
Ten of the 13 big beneficiaries of the Treasury Department's Troubled Asset Relief Program, or TARP, saw their outstanding loan balances decline by a total of about $46 billion, or 1.4%, between the third and fourth quarters of 2008, according to a Wall Street Journal analysis of banks that recently announced their quarterly results."
What is happening is deleveraging. That is, financial institutions are writing off toxic loans; businesses are paying off loans; and consumers are paying off loans. In other words, no loan demand. Further evidence that deleveraging is alive and well is that CNN reports that 87% of respondents to a recent poll would pay down debt or save it if they would receive a $500 tax credit. Bottom line, no one wants to take on additional debt!
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