Banks to Lend More as Confidence Returns

In a speech to the Mortgage Bankers Association on Friday, Assistant Treasury Secretary in change of the TARP, Neel Kashakri, said that banks will continue to supply credit as confidence returns to the markets.

"In just over one month, we have disbursed an estimated $151 billion to 52 institutions in 25 states across the country, which means that over half the money is already out the door. We are ramping up quickly from here," he said. "This progress is remarkable not only in its speed and quality, but also in its scope. We have touched almost every banking market in the nation with applications representing small and large banks alike. The largest investment has been $25 billion. The smallest investment has been $9 million."

Nevertheless, it may take a few months to process all the requests that have been make for access to the program, he added, reminding participants that bank are under obligation to lend the borrowed funds from the TARP program.

He also noted that market conditions have improved since October, he said, citing narrowed CDS spreads for banks and falling libor rates.

By Erik Kevin Franco and edited by Nancy Girgis
©CEP News Ltd. 2008