No New News: Banks Won't Lend Money

From 247wallst.com

Despite getting cash from the government, banks aren't lending more money. It makes a good headline, but it does not have any shock value. Why would anyone be surprised?

According to The Wall Street Journal, "Ten of the 13 big beneficiaries of the Treasury Department's Troubled Asset Relief Program, or TARP, saw their outstanding loan balances decline by a total of about $46 billion, or 1.4%, between the third and fourth quarters of 2008."

The banks put forward the compelling argument that in a recession there is too much credit risk. What they do not admit so readily is that they may need the cash to offset more losses from the pools of toxic assets, consumer credit, and LBO loans that they hold.

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Stocks: Bank of America (NYSE: BAC), JPMorgan (NYSE: JPM), Wells Fargo (NYSE: WFC), Citi (NYSE: C).

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