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Big banks still not lending

Loan volume at the 21 largest recipients of government funding fell 7% during the month of April, according to a survey by the Treasury Department.

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By David Ellis, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Lending at the nation's top banks slowed in April, according to a government report published Monday, driven in part by continued deterioration in the U.S. economy.

The dollar amount of new loans issued by the 21 biggest recipients of taxpayer funds under the government's Troubled Assets Relief Program, or TARP, fell 7% to $273 billion from nearly $295 billion during the month of March.

Regulators attributed part of the decline to lower demand for new commercial and industrial loans, which fell nearly 29% during the month as U.S. businesses broadly avoided acquisitions, building plants and buying inventory.

Weakness was also notable across a wide variety of consumer loan categories, including first mortgages and credit cards. Of the 21 banks that took part in the survey, 15 reported a decline in loan originations, according to the Treasury Department.

Banks have been under pressure to increase lending since the government provided billions of dollars in aid to help prop up the industry last fall.

Consumers and businesses continue to argue that credit remains tough to come by, but banks maintain they are lending even as the appetite for new loans has dropped.

Instead, consumers seemed to be focused on paying down debt in April, regulators said Monday. The total amount of outstanding loans in the survey fell 0.8% to $4.34 trillion from $4.38 trillion in March.

One new feature of the monthly survey was a reading on small business lending. The government said that the amount of new small business loans was roughly $8 billion in April, although it did not provide numbers for small business lending from the previous month. To top of page

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