No lending, no recovery

Full Story at money.cnn.com

NEW YORK (Fortune) — In an ominous sign for the recovery, bank loans are drying up faster than ever.

Loan balances at commercial banks fell at the fastest clip in at least 25 years in the third quarter, the Federal Deposit Insurance Corp. said Tuesday.

Outstanding loans have fallen every quarter since last fall, when the collapse of Lehman Brothers and other big financial firms turned a recession into a full-fledged financial crisis.

But the third quarter decline was the sharpest yet, leaving banks’ balance sheets 7% smaller than they were at this time a year ago.

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