Bailed-Out Banks Cut Lending

Consumer credit remains frozen, even at banks flush with bailout funds

(NEWSER) - Though US taxpayers own $172.5 billion of shares and warrants in 208 financial institutions, most of them still can’t get a loan. Interbank lending rates have fallen since TARP funds have been paid out, but consumer lending remains tight and average credit card rates are virtually unchanged from October 2007, Bloomberg reports. "If you’re taking money from the public purse, we should get something in return, and we’re really not,” says an econ professor. More»

Econ professors say capital infusion best option

(NEWSER) - The Treasury gets gold stars for finally recapitalizing collapsing banks, with the Wall Street Journal reporting on reactions from economics professors:

• Barry Eichengreen, UC Berkeley: "I would give it an A- for quality but lower the final grade to a C for lateness."
• Kenneth Rogoff, Harvard: "Thank goodness they didn’t dally for another week."

Data will show potential losses in specific loan categories

(NEWSER) - The US will learn the fiscal health of its 19 biggest banks Thursday, when the Federal Reserve and Treasury release the results of the “stress tests,” the Wall Street Journal reports. Delayed somewhat, the results will contain potential loss estimates in specific loan categories for each bank, and aggregate data to give an overall picture of the banking system’s health. More»

Journal says Treasury's tally hides damage

(NEWSER) - Banks that received taxpayer aid to restart lending are loaning less than they did before the bailout, a Wall Street Journal analysis finds. The most recent figures available, from February, show a 23% drop in new loans from the lending level in October, when the Treasury Department kicked off TARP, the Journal notes. The figures are a more alarming and possibly more accurate measure than those the Treasury uses. More»

Administration eyes creation of private funds to suck up toxic debt

(NEWSER) - The Obama administration is considering creating multiple investment funds to buy up the toxic debts at the heart of the financial crisis, insiders tell the Wall Street Journal. No fixed structure has been agreed upon, but under one leading plan the funds would be administered by private investment managers who agree to add private capital to the government's bailout money. More»