Residential mortgage lending was essentially flat during the fourth quarter at the 20 largest banks that the government has taken a stake in through the Troubled Asset Relief Program, or TARP.
The median change in residential mortgage loan balances at the banks was a 1 percent decline, the Treasury Department said in a report this week.
Among the 20 largest banks to have received capital infusions, Wells Fargo was the biggest originator of first mortgages, with $48.2 billion in originations for the quarter. Wells Fargo was followed by Bank of America ($44.6 billion), JPMorgan Chase ($28.3 billion), Citigroup ($16.3 billion), U.S. Bancorp ($8.4 billion) and SunTrust ($7.2 billion).
The median change in corporate loan balances was a 1 percent decline, while the median percent change in loan balances for U.S. credit cards was an increase of 2 percent, reflecting greater reliance on existing credit lines by consumers, the report said.
In commercial real estate, renewals of existing accounts increased significantly, while new commitments decreased. The median percent change in renewals of existing accounts was an increase of 55 percent, and the median percent change in new commitments was a decrease of 19 percent.
Loan origination and underwriting activities were weak from October to November 2008 but picked up from November through December, fueled by falling mortgage interest rates.
The report noted that unemployment rose from 6.5 to 7.2 percent during the fourth quarter as more than 1.5 million jobs were lost, and real GDP decreased by 3.8 percent. In the past nine recessions, inflation-adjusted total private sector lending per quarter has contracted an average 30 percent from peak to trough, the report said, while real GDP has contracted 2 percent.
The government has purchased preferred stock in 400 banks in 47 states since the program began (see list), and has begun releasing monthly reports on the 20 largest banks’ lending activities. Those banks hold about 90 percent of all deposits.
As talk of the government nationalizing Citi and Bank of America grows, Bank of America announced it had made its first $402 million dividend payment to the government in connection with $45 billion in government investments in late 2008 and early 2009.
Bank of America said it expects to make $2.8 billion in dividend payments to the government this year, and intends to pay back the loans "as soon as possible."
"In the meantime, we are using these funds to support the U.S. economy by extending credit to individuals and businesses," Chief Executive Officer Ken Lewis said in a statement.
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