Treasury Lending Report Sees Another Decline

MARTIN CRUTSINGER

WASHINGTON (AP) — Lending by the largest banks that received government bailout support declined for the sixth consecutive month in July, the government said Tuesday.

The Treasury Department said in its monthly report that average loan balances at the top 22 recipients of government bailout support dropped by 1 percent in July. The average loan balances had also fallen by 1 percent in June.

The survey monitors the impact the bailout program is having toward boosting lending to consumers and businesses.

Critics have charged that the bailout program has failed at its major goal. The Obama administration argues that lending would have dropped off even further during the recession if it had not been for the government's rescue efforts.

In dollar terms, the average loan balance at the top 22 banks that received support from the government's $700 billion financial rescue program declined by $53.9 billion in July after dropping by $45.7 billion in June.

The report said that the origination of new loans fell by 10 percent in July compared to June. It attributed the drop in average loan balances to decreased demand from borrowers, although banks have also been tightening up on their lending standards to reduce levels of bad loans on their books.