Treasury: Bank lending declined in Feb.

April 15, 2009 10:53:03 AM PDT
Bank lending to consumers and businesses for many types of loans fell in February despite the billions of dollars in government support the banks received. The Treasury Department said Wednesday its latest monthly survey of lending activities at the nation's biggest banks showed nine reported increases and 12 posted declines. The median, or midpoint, for lending activity dipped 2.2 percent in February.

While the median level of activity in mortgage lending rose 35.4 percent and home equity lines of credit grew 17.7 percent, lending to businesses for commercial and industrial loans plunged 47 percent.

"Against a difficult economic backdrop, banks extended approximately the same level of loan originations in February as January," the Treasury report said. "The relatively steady overall lending levels observed in February likely would have been lower absent the capital provided by Treasury."

The findings on loan levels were based on reports filed by the top 21 recipients of rescue money from the government's $700 billion bailout fund.

Critics of the rescue effort have complained the government has not done enough to ensure that the money banks receive is being used for its intended purposes - to resume more normal lending to businesses and consumers.

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