At Last! Banks Rev Up Lending
U.S. banks posted their biggest quarterly increase in lending in four years, offering reason for optimism that the economic rebound is picking up steam.</br></br>The lending expansion -- detailed in the industry's latest report card from a top regulator -- is good news for the U.S. economy at a time when the unemployment rate is 8.3% and investors remain anxious about the prospect of an economic downturn or market shock spurred by Europe's debt crisis. Increased credit availability stands to help U.S. businesses that have been looking to finance new growth.</br></br>The lending pickup is a bright spot in a period of intense questioning about banks' earnings power. U.S. financial firms have been under pressure in the markets as weak economic growth, tighter regulation and a decline in trading and deal making crimp their earnings outlooks.</br></br>The report, released Tuesday by the Federal Deposit Insurance Corp., also showed that the banking industry posted a $119 billion profit for 2011. That is up 40% from a year earlier and the banks' biggest profit since 2006, when the housing boom was in full swing.</br></br>The profit surge came as loan losses fell to their lowest level since early 2008, in the latest sign that the industry is healing from the bad lending decisions that laid it low during the financial crisis.