It's certainly difficult to positively spin the commercial banking lending trends. The percentage of total, business & commercial, and real estate loans to total credit continue to contract since the onset of the crisis in 2008. Business & commercial and real estate loans which accounted for nearly 60% of total credit creation in 2008 have contracted to nearly 50% in 2010. Even consumer loans which had carried more of the credit creation burden after 2008 is beginning to weaken.
Where’s all the (bailout) cash going? The table below reveals that an increasing amount has been heading for Treasury and Agency debt. Treasury and agency debt as a percentage of total bank credit has risen from a low of 12.1% in 2008 to high 17.7% in 2010.
There’s an old saying that you can lead a horse to water (access to credit) but you cannot make it drink (borrow).
Breakdown of Total Bank Credit:
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