Although a main purpose of the Troubled Asset Relief Program was to increase bank lending, a new report casts doubt that recipients of TARP funds are following through. The AP reports the “20 largest banks that received government rescue funds slightly reduced their lending to consumers and businesses in the last three months of 2008.”

The report “is the latest sign that the bailout has done little to increase bank lending.” According to the Washington Post, “The banks that got the most government money, Bank of America and Citigroup, led the retreat.” The Wall Street Journal adds that Treasury officials acknowledge that “the expected decline in fourth-quarter lending was a sign that the program wasn’t working as intended.”

Greenspan: Banks Need Billions More The Financial Times reports former Federal Reserve chairman Alan Greenspan said yesterday that the Obama administration “will have to go back to Congress for more money to recapitalise the banking system.” Greenspan’s “comments suggest the need for hundreds of billions of dollars over and above the funds remaining” in the TARP.

Graham: GOP Open To Nationalizing Banks The Financial Times reports, “Nationalization is gaining rapid acceptance among Washington opinion-formers,” including Republicans. The Times notes that Sen. Lindsey Graham “says that many of his colleagues, including John McCain…agree with his view that nationalization of some banks should be ‘on the table’.”

US Has Lost $86.5 Billion On Preferred Shares The Hill reports that the federal government “has lost $86.5 billion in the stock market since the end of October courtesy of the Wall Street bailout.”

Source: USNews.com