Treasury Delivers Monthly CPP Report

lance sheets belonging to the top recipients of Capital Purchase Program investment continued to contract in March, according to the Treasury Department's monthly bank lending survey. The survey shows that outstanding loan balances at the top 21 recipient banks slipped 1% in March, and originations rose by 27%. The results came amidst the ongoing contraction of the economy, the Treasury says, noting that real GDP fell a sharp 6.1% at an annual rate, with particular weakness in spending on business inventories and plant and equipment. Total employment fell more than 700,000 per month in the first quarter, compared to an average monthly job loss of about 550,000 in the fourth quarter of 2008. On the flip side, the pace of the home building decline slowed, mortgage rates moved lower, and consumer spending and confidence grew slightly. Additionally, securitization has accelerated; almost $11 billion in new asset-backed securities were issued in March, compared to about half that amount in the previous two months combined. The survey results presented here show that loans to consumers held on banks' balance sheets in three categories – first-lien mortgages, home equity lines of credit and other consumer loans – all increased in March. However, increases in first-lien mortgages and other consumer loans were smaller than they were in February. Outstanding credit card balances held by major banks continued to fall, and were down 2% in March. In addition, total used and unused commitments for both credit cards and home equity lines of credit fell again in March, as they have for every month of this survey. In the commercial real estate (CRE) sector, the survey results for March point to continuing poor market conditions and general caution by businesses, as was also reported in the February survey. While CRE loan balances at these 21 banks were up slightly, banks reported that demand for CRE loans remained well below normal levels, as businesses are focusing on strengthening their balance sheets, reserving for future losses and downsizing. In addition, this general lower level of demand for new loans reflected a surplus in the market, as the supply of office space has increased due to firms' downsizing and office vacancies rising. SOURCE: Treasury Dep


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