WASHINGTON - WASHINGTON (AP) — The value of loans held by the biggest beneficiaries of the government's bank bailout fell for the ninth consecutive month in October, the Treasury Department reported Tuesday, a day after President Barack Obama criticized top bankers for not doing enough to boost lending.
The department's monthly report, which monitors the top 22 recipients of support from the government's $700 billion rescue fund, showed that their average loan balances dropped in October by $36.8 billion, or 0.9 percent. That followed a decline of 1.1 percent, or $45.9 billion, in September.
Obama had prodded bank executives to "explore every responsible way" to boost their lending, especially to small and medium-sized businesses who have been caught in a tight credit squeeze during the current hard times.
With the unemployment rate currently at 10 percent and economists projecting it will keep rising until next summer, the administration is under pressure to show more concern for the plight of workers and businesses on Main Street, especially given the unhappiness over reports of huge bonuses for bank executives who only a year ago were receiving huge sums of taxpayer support.
The White House meeting on Monday covered issues ranging from small-business lending to mortgage modifications to help Americans in danger of losing their homes. Also discussed was bankers' opposition to key parts of the sweeping financial overhaul proposal now working its way through Congress.
The discussion came on a day two of the largest recipients of government assistance, Citigroup Inc. and Wells Fargo & Co. announced they had won government approval to begin cutting their links to the $700 billion bailout fund, known as the Troubled Asset Relief Program.
Citigroup said that it would repay $20 billion that it had received late last year while Wells Fargo said it would repay $25 billion in taxpayer support as soon as it raises $10.4 billion by selling stock.
Treasury Secretary Timothy Geithner said Tuesday that with the latest announcements more than $185 billion that the government injected into the banks is now scheduled to be returned with $90 billion of that figure coming in just the past two weeks.
"The government is rapidly unwinding this unprecedented involvement in the financial sector," Geithner told an audience at the Treasury Department. "And as banks repay, as private investment comes in to replace the government's investments, banks will be in a stronger ... position to lend."
Geithner last week formally notified Congress that the administration will extend the TARP program until Oct. 3 of next year, saying the program would focus in its remaining months on boosting business lending and helping homeowners cope with a tidal wave of mortgage foreclosures. The administration last week slashed its estimate of how much the government will lose from the $700 billion program by $200 billion, now projecting losses of less than $141 billion.
Treasury's lending report Tuesday showed that the top 22 recipients of TARP funds had average loan balances of $4.12 trillion in October compared to an average of $4.16 trillion in September.
The report said that the origination of new loans by the top TARP recipients had edged up a slight 0.3 percent in October to $240.2 billion, compared to $239.4 billion in September, a month when new loan originations had climbed by a larger 2 percent.
The largest banks that received TARP assistance have been scrambling to pay back the government support in an effort to escape the additional scrutiny that participation in the program has triggered, including government restrictions on bonuses paid to top executives.