New Loans Fall At TARP Banks

The U.S. Treasury said on Monday that new loans at nine major banks, which received significant government aid through the Troubled Asset Relief Program (TARP) during the height of the financial crisis and have not repaid yet, tumbled in Jan 2010.
 
In its monthly survey of lending on the TARP banks, the Treasury found that new loan originations at these nine banks fell about 35% from Dec 2009 to $35.9 billion in Jan 2010. The amount was even lower than $41.6 billion of loan originations in October when new loans had fallen last.
 
According to the Treasury, the drop in loan originations in January could partially be a result of large increases in originations during November and December of 2009.
 
The nine major banks that are under survey by the Treasury are: Citigroup Inc. (3.94 +0.05 +1.29%), Fifth Third Bancorp (13.36 -0.02 -0.15%), Suntrust Banks Inc. (27.08 +0.09 +0.33%), Comerica Inc. (37.56 +0.30 +0.81%), Marshall & Ilsley Corp. ( 7.95 +0.01 +0.13%), PNC Financial Services Group Inc. ( 57.46 +0.16 +0.28%), Hartford Financial Services Group Inc. ( 26.565 -0.255 -0.95%), KeyCorp ( 7.52 -0.05 -0.66%) and Regions Financial Corp. ( 7.285 +0.065 +0.90%).
 
However, the survey confirms that the average loan balances were up by 2% in January from December.
 
As a result of its ongoing bankruptcy proceedings, CIT Group Inc. (36.72 -0.09 -0.24%) did not submit January figures.
 
Most of the major institutions in the financial market like JPMorgan Chase and Co. ( 43.17 +0.10 +0.23%), Bank of America Corp. ( 16.9575 +0.1075 +0.64%), Wells Fargo & Co. ( 29.79 -0.10 -0.33%) and Goldman Sachs Inc. ( 174.43 +0.90 +0.52%) have repaid the TARP loan. Also, the Treasury has started auctioning stock warrants it acquired from the banks that received a significant portion of taxpayers' money and have fully repaid the same.
 
We think that the repayment of government money and auction of warrants can be viewed as a sign of recovery of the institutions as well as the economy. According to the Treasury, losses on TARP investments are likely to be significantly trimmed with the improvement in the overall financial condition.