The question of whether banks in the aggregate are lending or not gets partially answered every Friday when the Fed releases the assets and liabilities of the US commercial banks and if they are not, what they’re doing with their deposits. For the week ended Sept 23rd, commercial and industrial loans outstanding fell for a 12th straight week to the lowest level since Nov ’07. Lending also fell in residential real estate and credit cards but rose for CRE. Whether due to a lack of demand and/or concerns with the economy, banks instead bought mostly US Treasuries, Agency paper and MBS (guaranteed by FNM/FRE) as almost free money from the Fed has created a nice spread. Purchases of Treasuries/agency totaled $31.1b for the week, the biggest increase since Oct 22nd ’08 when panic resulted in buying of $79b. Agency guaranteed MBS purchases rose by $17.8b.