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The Associated Press
Updated from 1:01 p.m. EST
NEW YORK -- Shares of regional banks were mixed Tuesday, after the government introduced a number of new initiatives designed to help unfreeze the credit markets. The Federal Reserve said it will buy $500 billion in mortgage-backed securities, or pools of mortgages that are bundled together and sold to investors. The government will also lend up to $200 billion to the holders of securities backed by various types of consumer loans, including credit card loans. The programs represent the latest efforts by the government to help spur more normal lending among banks and to consumers. Financial institutions have been hesitant since the bankruptcy of Lehman Brothers in September to lend money for fear they won't be repaid. Credit quality continued to weaken in housing-related portfolios during the third quarter, even for banks outside of the more troubled regions of the U.S., according to a report issued by Standard & Poor's Ratings Services on Tuesday. Specifically, commercial banks that lend mainly in the South and the Midwest saw their already weakened credit quality deteriorate further in the quarter, S&P said. While reasonable lending opportunities appeared to exist in niche segments like small-to-midsize business lending, corporate lending opportunities remained scarce, the ratings service said. As a result, S&P expects strong reserve building to continue at least through the first half of 2009. Among the advancers in the sector were KeyCorp (KEY Quote), which closed up 58 cents, or 7%, to $8.69 in afternoon trading, and Fifth Third Bancorp (FITB Quote), which finished 45 cents higher, or 5.2%, to $9.13.
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