Bank Lending Keeps Dropping (WSJ)

I can't get anymore than this without subscribing, and there's no way I'm going to do that.

But:



I haven't found this being widely reported - I wonder why?

I am not a fan of the bank bailout. And so far, things are going pretty much like I expected they would.

I fearfully await the release of info on the bank stress tests May 7th, though currently I'm not clear on what procedure or format exists to make sure these results aren't just a bunch of sunshine made up numbers...

Oh, and FYI, Citigroup is going to need another $10 billion of your money.

http://www.reuters.com/article/newsOne/idUSTRE54107J20090502

doesn't tell the whole story. It really doesn't tell any story. Compared to Oct, how many more unemployed people are there? Do you really think the unemployed should be given loans? About the small business loans...unemployment and fear is driving the consumer into hibernation so a lot of retailers both large & small are suffering. Can you really justify any business owner asking for a loan (repayment is based on sales in the future) and be able to convince the lender he should give him the money?

That is the description of the death spiral that Pbama talks about. When consumer demand drops, business suffers, when business suffers, they lay people off, when people are layed off they CAN'T buy anything.........

That's the reason the Feds are injecting $$. They're the only ones remaining who can print the money to so so.

However, its down worse than expected, and most were hoping that policies would have translated into at least some uptick among the major banks by now...

It's not the whole story, sure. But its a very disconcerting piece of the story, I hope you would agree.

to me. The phrase "than expected" tick me off! Expected by who? I've been hearing this BS about "expected" for years now. So & so co. made a 9.6% profit, but it was "lower than expected"! The media spouts this bs about everything! Unemployment, earnings, losses, sales numbers, and everything else. Who the hell are these EXPECTING PEOPLE anyway? The media calls them "wallstreet, as if there was some person or group anonymously named Wallstreet!

Sorry to rant, but the media has been driving me nuts more than they did in the past. All the stories are about thoughts & comments from someone or something whose comments & feelings are always "off the record"!

I would have expected it to plateau or show small uptick, and the fact that is still falling (even if you take out the "than expected" part is troubling. But to me seems predictable because I was expecting banks to use government bailout money for anything and everything other than lending in this economic climate...

Still, your point about the "than expected" part - especially when it comes to earnings reports and how the market responds to them - is very well received by me. The sad thing about the "than expected" bit on earnings report is that the market is basically responding to a collective guess when they hear someone in the media say so and so's earnings were "less than expected" and they choose to sell off. Of course, the DOW is really nothing more than an arbitrarily chosen grouping of companies based on peoples guesses of other peoples assumptions about what might most reflect a "best guess" about what the market is doing too. And hedges are best guesses. So is buying stock at all....

The whole thing kind of makes me upset at times.

Enough of the HappyHS talk; time to start dealing with our worsening longterm reality.

I'm glad to finally hear some truth, because I am so sick and tired of these banks lying
to us about how glorious their profits are and how well they are doing. Their fake
good news has moved the market hundreds of points. If it's all a sham--we need to know.

In early March, City announced "profits" and "our best quarter since 2007".
http://www.forbes.com/2009/03/10/citigroup-financials-bernanke-markets-transcript-rally.html

Last week, Bank of America announced $4.2 billion Q1 09 profits. http://ledgerdelaware.com/articles/2009/04/20/news/doc49ec5a7a19cad222188474.txt
Wells Fargo announced similar positive news.

There have been other positive bank news dripping out this year.

Someone explain to me how in the hell the banks can be posting "record profits" when banks aren't lending and
people aren't borrowing?

None of this made sense to me, at the time of these announcements. And now that we see proof, in this article, that the
banks aren't lending--these questions about recent positive earnings--need to be addressed!

Where in the hell are these record profits coming from, if the banks aren't lending? Are they doing bake sales on the
weekends or washing cars?

There's some funny business going on here. Record profits, my hiney. Either they're lying or they're playing
smoke and mirrors with the numbers. The entire banking sector has rallied on days when these announcements were made.

It's like they're creating more bubbles again--to give themselves a few more months. It appears that these bubbles
are based on cooked-up numbers and creative accounting.

This really needs to be analyzed thoroughly.

accounting rule changes = smoke and mirrors. many of the largest banks are insolvent...............but they CANNOT admit it or the whole house of cards will collapse..

stress tests, then?

The stress tests were supposed to be released in early April.

Now we wait. I doubt we'll actually know the real truth though.

I agree with you about the banks being insolvent. However, aren't they going to have to come clean, at some point?

So,there using creative accounting and the tarp money to give the appearance of profits or "record profits".

They can't run these tactics forever. Are they delaying the release of bad news, or do they actually think that they
can turn this all around while they're trying to hide the bad news?

I'm not sure what they're playing at...

do you realize that it was the banks themselves that did the stress test! using guidleines given them by their "regulators" and they were also given WIDE latitude to "adjust" their results under THEIR models..... think about it, the GOV lets loose a whopping 150 "analysts" to run the stress tests on the 19 largest banks over a period of about 30 days? these banks have hundreds of departments and subsidiaries, HUNDREDS!! it is IMPOSSIBLE for 150 inspectors to do this test, so the banks did most of the work themselves. so the results will not be GREAT but they will also be "not so bad" maybe they will be touted as "better than expected" for most.. worst case one or two large regionals will be sacrificed to give the test credibility. but rest assured no "primary lender" no "systemically important" bank will fall! that I promise you...

the whole article is at this link.




* APRIL 20, 2009

Bank Lending Keeps Dropping
Analysis of Treasury Data Paints Starker Picture Than Official Government Snapshots


http://online.wsj.com/article/SB124019360346233883.html

Lending USED to be reserved for credit-worthy peopke ONLY..

As incomes fell, or failed to keep pace with costs, more and more people NEEDED to borrow, and banks loosened up lending and issued bazillians of credit cards to people who had very little ability to ever pay more than the "low-low monthly payments"...

As for business loans , to meet payroll...well if your company is so stressed that loans are needed to make payroll every pay period, perhaps the business model is not all that great, or perhaps you should be working FOR someone instead of "running a business" that's only marginally solvent..

Banks may be looking closer , at small businesses that seem to be not making enough to be viable..and choosing to not loan anymore to them. Darwinistic Capitalism will work it's "magic" and eliminate the weak businesses:(

People no longer stay at one job for very long, and most people are not union, so they have little or no control over how much they make, or how to increase their earnings..

Banks have been on a runaway train, headed for a cliff...

They have arrived at their final destination:(..and we have all been taken along for the ride:(

For instance, doctor's offices. Insurance companies are so goddamned miserly about paying their customers' medical claims that it often leaves doctors in a lurch. Would you have doctors amend their business model and refuse to see patients?

A lot of small businesses in various industries are at the mercy of the corporate overlords. There's nothing wrong with their business models other than being under the thumbs of those fuckers.

of the lenders..

My aunt ran a successful small business for almost 40 years..never borrowed a dime....

Her business plan was sound, and she always spent less than she took in.. That business funded a paid off home, and a round-the-world cruise every year, in their later life.

She kept a close watch on her inventory..always paid cash..early (to get the discount), and never "branched out".. She knew her clientele, and did not gamble on getting bigger..only to fail and end up broke..

She was a young married woman during the depression, and she learned how devastating it was to be flat broke, and to owe money.. A friend of hers' father committed suicide in front of her friend because he owed money and the family was losing the house..

to pump their fees & profits.

but why not nationalize them? We have nationalized their debts.

They have hurt us more than Al-Quaeda or the Taliban... how about a little "War on Bank Terrorism"?

Yes, Yes... I know.... the fucking banks OWN the government.

(1) An automatic in-person audit of every financial institution in trouble, and if necessary, the appointment of a special prosecutor / task force assigned to prosecute criminal misconduct.

(2) The reimplementation of a small tax on stock transactions, something we've already done in the past in our country and something that most other countries (including the UK) already do. The revenue generated from even a 0.25% tax would total to many billions (app. 150 billion in first year alone) and could be used to help fund Wall Streets own bailout in the short term, and partially help paying down national debt in the long term.

(3) A bottom-up rather than "trickle down" approach to financial recovery. Instead of a "bank bailout" aimed at helping them unload "toxic" assets, a "borrower bailout" - eliminate the "toxic" assets by negotiating agreements between lenders and borrowers that borrowers can afford in the easier cases, and buy-out borrowers in the worse cases. No bad assets no problem, except of course for the fact that Wall Street can't get fat off the "rescue" process.

(4) More direct, short term, stimulus spending, aimed at job creation through the so-called "shovel ready" infrastructure projects. Obama said prior to the last stimulus bill that it wouldn't be a "public works project" like in the days of FDR. But he never made the case for why not. We should have such a program as it is incredibly effective stimulus and helps real people in need of real jobs, as well as helps deal with our crumbling infastrcuture, which is a long term problem.

copy and paste some of the text into google. That usually works for me.