According to weekly figures provided by the Federal Reserve, total loans at commercial banks have fallen at a 19% annual rate over the past three months, while loans to businesses have dropped at a 28% annualized pace. Last autumn, bank lending temporarily expanded when other sources of funding from the shadow banking system dried up after the collapse of Lehman Bros. Since then, however, total outstanding bank loans have dropped at an accelerating pace. The decline in bank lending mostly affects smaller businesses. Larger corporations have alternative sources of funding, including retained earnings, corporate bonds, securitized loans and new equity. Those other sources of capital have increased in recent months, but not enough to offset the decline in bank lending. In the first and second quarters, the U.S. private sector consumed more capital than it raised for the first time in more than 60 years. Negative net investment is &quot;the hallmark of depression and difficult to reverse,&quot; said economist Leigh Skene of Lombard Street Research.
Equity Difficult For Companies to Obtain Fewer deals are getting funded compounded by smaller investment sizes PWC Moneytree
Credit Virtually Unavailable 28% Annualized Decline Federal Reserve: loans to commercial and Industrial In the first half of 2009, companies consumed more capital than they raised for the first time in 60 years