Top TARP recipients extended $245 billion in new loans in Dec and January

[Aloha Spirit]

Here's a summary of lending trends as reported at financialstability.gov (updated yesterday)

"Summary Analysis: Decemeber 2008 – January 2009
Notwithstanding deteriorating economic conditions through January 2009, the survey of the top 21 bank recipients demonstrates that banks continued to originate, refinance and renew loans in the period from December 2008 to January 2009. Lending levels increased from December primarily in the consumer lending categories which was driven by attractive mortgage rates and seasonal demand factors. The commercial lending segment remained constrained as demand for additional debt remains weak...."

http://www.financialstability.gov/impact/surveys.htm

...and...

Here's what the GAO says about the state of lending by TARP recipients based on the Treasury's reports: (from today)

"....Some indicators revealed that the cost of credit has increased in interbank and corporate bond markets and decreased in mortgage markets, while perceptions of risk have declined in interbank and mortgage markets and risen in corporate debt markets. In addition, although Federal Reserve survey data suggest that lending standards remained tight, the largest CPP recipients extended roughly $245 billion in new loans to consumers and businesses in both December 2008 and January 2009, according to the Treasury's new loan survey. However, attributing any of these changes directly to TARP continues to be problematic because of the range of actions that have been and are being taken to address the current crisis. While these indicators may be suggestive of TARP's ongoing impact, no single indicator or set of indicators can provide a definitive determination of the program's impact."

http://www.gao.gov/products/GAO-09-504


It will be interesting to see how TARP recipients fared in the first quarter.
It's possible that the government's efforts are actually making a significant difference.

(That's right, I'm a freakin' optimist :hi: )

[NJmaverick]

1. This is sort of what was expected to happen

and is certainly welcome news

[Aloha Spirit]

2. I agree,

and I fervently hope that we'll get some more good news like this in the next few weeks so that the negativity will settle down.

[PBS Poll-435]

3. Citi, JPM, and BoA have all gone on record saying Jan/Feb were profitable months

Now it could be that they had an operating profit, but that they will still write down intangibles/under-performing assets and show a loss.

But I am an optimist too.

[amandabeech]

9. Ha, Ha, Ha! Wow! That's a funny one! n/t

[PBS Poll-435]

13. Um...I guess we will see in April

When they report results.

[amandabeech]

14. Or don't, if infusions from the AIG pass through aren't discussed or

otherwise reflected as a line in the income statement or discussed in the notes thereto.

Or if the second quarter looks bizarrely worse than the first.

[SpartanDem]

4. definately a good sign

[TexasObserver]

5. There are some positive signs.

I think we are in for a long period of recovery, but I do believe we are on our way.

[girl gone mad]

6. So they can pay us back now, right?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNqa2y1RGKEA&refer=home">Maybe not.

How about a comparison with banks that didn't get TARP funds or have given them back? Are the TARP banks making good loans or are they just trying to re-inflate the bubble with free money?

I noticed this only applied to residential RE. Commercial RE was down sharply and Credit Card lending is flat. Is this simply lending related to the high foreclosure activity or is it a genuinely positive sign of a recovery in housing? Prices are still falling precipitously, though the pace of the declines has slowed somewhat.

There is too little actual information in this report for anyone to conclude that this is a positive indicator.

[Aloha Spirit]

7. I'd encourage you to read this report if you're interested in details of

lending practices for TARP recipients.
Yes, it's not enough information to say definitively that banks are using TARP funds as we would like them to, but the purpose of the post was to suggest that TARP funds may be improving the credit picture.
http://www.treas.gov/press/releases/reports/report0315.pdf

[girl gone mad]

8. I did read the report.

It didn't answer my questions.

[ProSense]

10. What does extending loans have to do with paying the money right back now?

Wasn't the TARP supposed to stimulate lending?

I mean, it's one thing to oppose the bailout, but another thing entirely to conflate unrelated issues.

[girl gone mad]

12. Has TARP stimulated lending?

Or has it been used for acquisitions, bonuses, junkets, jets, and paying connected counterparties face value for toxic junk?

Is this lending that would not have occurred without this massive, lightly regulated bailout? There is nothing in this report that would lead me to believe so.

Are TARP recipients lending more than non-recipients? Last I heard, the answer was http://seekingalpha.com/article/119919-banks-avoiding-tarp-funds-lending-more">NO, http://www.housingwire.com/2009/02/18/mortgage-lending-down-among-top-tarp-recipients">they aren't.

TARP was sold to us as a loan the banks would pay back. If it's working as planned, which the OP asserts, then the banks should be able to start paying us back with 5% interest, as promised.

The more I look into this press release, the more it looks like useless spin designed to make us feel better about blowing $700B in a futile attempt to avoid an outcome that happened anyhow.

[ProSense]

15. Is this a competition between TARP and non-TARP banks?

Is that what stimulate lending means?

[Kurt_and_Hunter]

11. Three words: re-fi-nance

We know there is a refinancing boom because interest rates are low (primarily because the economy is down)

The people refinancing residential RE are folks with impeccable credit and strong cash-flow who are in the position of, "If you would like your mortgage payment to go down 500 or 1,000 per month, sign here."

A re-fi does free up some disposable income, though does so while reducing the banking system's income from the class of sure-fire safe performing mortgages by the same amount.

On balance, re-fis are better than nothing.

But they are not nearly as meaningful in terms of new economic activity as loans to buy things, new mortgages, small business loans, etc.

[Raineyb]

16. Most of the loans were refiances on mortgages and there was an uptick in Student loans

Of course with the spring semester starting at colleges the uptick wasn't exactly a surprise was it?

:shrug:

I don't really see this as the big reason to celebrate that the OP seems to think it is.

Regards