The 20 largest banks that received billions in US government rescue funds slightly reduced their lending to consumers and businesses in the last quarter of 2008, the government said yesterday. Banks cut their mortgage and business loans by a median of 1% each, while credit card lending rose by a median of 2%.
The Treasury Department report is the latest sign that the bailout has done little to increase bank lending, one of its principal goals of the. A Fed survey this month found that nearly 60% of banks have tightened lending standards on consumer loans. Lawmakers have blasted the banks for misusing the money, although Treasury says lending would have fallen much further without the bailout.