Source – People’s Trust Toronto
Is the Fed fabricating loan level data? Or, less dramatically, is the Fed merely once again goalseeking its weekly “data” to account for a world in which deposit expansion is no longer running at the pace seen in pre-taper days. It would be logical that the one “plug” the Fed would adjust to balance off its model is to boost lending activity, which would explain why the Fed is suggesting lending is surging.Unfortunately, lending is not only not surging, it is contracting, if only among the Big 4 banks in the first quarter.So whether the Fed has an ulterior motive, or is simply fudging for a lowered Fed reserve creation growth trendline, we believe the people deserve an answer: just what is really going on here?
The number of new commercial loans made by BAC has declined notably over the first half of the year. Measured as an indexed level to cycle peak (which was December 2005), the data show that the recent drop was the largest since the recovery began.
The drop in new loans is a worrisome sign given the importance of new business formation and small business expansion in generating a stronger overall recovery. The number of loans for renewal/extension has remained fairly constant, holding steady through the recession.
Justin Deschamps says
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Real Estate Commission Loans & Real Estate Cash Flow