Lending dropped sharply in third quarter

WASHINGTON, Nov. 24 (UPI) -- The Federal Deposit Insurance Corp. said Tuesday U.S. bank lending had declined for the fifth consecutive quarter July through September.

The drop in lending, down 2.8 percent in the quarter, was the largest single-quarter decline since 1984, The Washington Post reported.

Lending dropped further on average at larger banks, despite larger banks accepting the lion's share of federal bailout funds that was meant to spur lending.

FDIC Chairwoman Shela Bair said Tuesday, "We need to see banks making more loans to their business customers."

In the third quarter, lending declined in every category of loan with the drop taking a potential $210.4 billion in loans out of the economy.

While loans declined, the FDIC said banks posted a total profit of $2.8 billion in the third quarter, a gain from the second quarter, when banks lost $4.3 billion.