The Treasury Department released its June Monthly Bank Lending Survey, and the results are...mixed. Overall, outstanding loan balances for the 22 banks receiving TARP funds fell by 1 percent in June, but the new loan originations increased by 13 percent. Looking closer at the data reveals that outstanding loans to consumers fell by 1 percent, while new loans to consumers increased by 9.7 percent in the same period.

And as the Treasury released this report, the Federal Reserve offered its view of the broader commercial and consumer lending situation. From The Wall Street Journal ($):

Indeed, about a third of banks surveyed said, on net, that they tightened lending to businesses in the three months ended in July, down from roughly 40% in April's survey. The percentage of banks that tightened standards on commercial-real-estate loans dropped 20 percentage points, to 45%. For residential real estate, the percentage fell to 20% from a peak of about 75% a year ago.

Caution was evident in the Fed report as demand for loans weakened in every sector except for residential mortgages. The drop in demand was the top reason banks cited for the overall decrease in business lending. They also cited fewer borrowers with good credit as a factor for the drop in lending.

So, with economy deteriorating, so too are borrowers' credit ratings, which makes sense. But shouldn't TARP and TARP-related programs be compensating for this dip in credit worthiness to help consumers through rough patches? To what extent is TARP helping in this regard? Would consumer lending be even worse without TARP?

(click for Report Tables PDF)