Lending Drops Most Since 1984
By Michelle Krebs November 30, 2009Lending by U.S. banks - the lifeblood of the auto industry -- fell 2.8 percent in the third quarter, the largest drop since at least 1984 and the fifth consecutive quarter in which banks have reduced lending, according to a Federal Deposit Insurance Corp. issued Tuesday and reported on by the Washington Post.
The paper said the decline in lending is emerging as a serious impediment to economic recovery.
The banks reduced the amount of money extended to their customers by $210.4 billion between July and September, cutting back in almost every category. Large banks, the beneficiaries of billions of dollars in federal aid intended to spur new lending, were responsible for a disproportionate share of the decline, the FDIC said.
The FDIC also said that just three new banks were created during the third quarter, the smallest number since World War II.
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