Fed Data Confirms Banks Are Lending

Contrary to what you might believe from Congressional grandstanding, banks receiving TARP money are in fact lending. According to MarketBeat on WSJ.com:

"According to the Federal Reserve, total commercial and industrial loans by all commercial banks were $1.568 trillion for the week ended January 28. That’s down from October’s peak, when those loans reached $1.61 trillion. The pace of lending is hardly robust, but the problem isn’t with the lack of bank lending, it’s with the collapse of the securitization market, something that most of those on Capitol Hill haven’t come to terms with yet in today’s hearing...

"Securitization issuance is down 91% from this point last year, according to Dealogic, with asset-backed issuance declining to $2.6 billion from $32.1 billion at this point a year ago. Most consumer loans, such as credit cards, auto loans, student loans and others, are relatively easy to bundle and sell as securitized assets, but not now, when buyers of such product do not exist."

James Bianco, president of Bianco Research, put it quite well: “But they’re [the banks receiving TARP money] being asked to make up for the loss of securitization and that’s too much to ask.” Apparently the key issue of securitization is lost on the House Financial Services committee. Problem is, the actual issues underlying the ongoing financial crisis simply don't make for an exciting hearing- or votes for that matter. Representative Michael Capuano's comments, for example, were extremely helpful and enlightening:

"All or most of you engaged in all or some of the activities that created this crisis. You come here today on your bicycles after buying Girl Scout cookies and helping out Mother Teresa. You're saying, 'We're sorry. We didn't mean it. We won't do it again. Trust us. . . . ' America doesn't trust you any more."

grand-stand: (v.) to conduct oneself or perform showily or ostentatiously in an attempt to impress onlookers