Has it worked?

The objective of the original $750 Billion Troubled Asset Recovery Program, passed by Congress at the insistence of the Bush Administration last fall, was to jump start lending at the largest banks in the U.S.  According to an analysis by the Wall Street Journal, as reported by David Enrich, Michael R. Cittenden, and Maurice Tamman in last Monday's Journal. it didn't work!

Indeed, the total loan volume by lenders who received the most TARP money dropped in three of the four months covered by the U.S. Treasury Department Survey.  Only three of the 19 lending institutions at the top of the TARP list originated a greater volume of loans at the end of the period, as compared to October.

The findings could fuel a fire of discontent over the Bush bailout program, as well as the one put into place in the early days of the Obama Administration, at the perceived lack of funding coming from major banks, combined with the public backlash over executive perks and bonuses at the same financial institutions who took the most Federal Bailout Money.

Last weekend, speaking in Trinidad, President Obama called for greater lender "accountability" with the TARP Bailout Funds. 

Why? 

Many experts feel bank lending levels will portend how quickly the U.S. Economy will rebound.   It also has a direct impact on the U.S. Housing Market, as consumer loans, especially mortgage financing and re-financing, make up nearly half of all loans written to consumers.  Excluding mortgage loans and re-finances, however, consumer lending dropped  by roughly 33% between October and February.  Lending to businesses dropped about 40% over the same period, according to U.S. Treasury Department Data.

Of the 19 banks leading the TARP Funds Received List, only three originated more loans in February than in October, 2008 - BB&T Corporation, a regional bank based in NC, major Wall Street brokerage house Morgan Stanley, and State Street Corporation, a major institutional lender based in Boston MA.

The bank with the steepest loan decline is the top retail bank Chicago and the Chicago Metro Area - J.P. Morgan Chase.  That bank made $61.2 Billion in total loans last October.  In February, that figure fell to $39.7 Million - a falloff of 35%.

See the WSJ Story for more details, graphics, and relevant quotes.  Also, read our post via BlogChicagoHomes.com.

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