Excess Reserve Surge Douglas Downing Robert Nielsen Seattle Pacific University

1) slowdown causes less loan demand? 2) bank lending cutback causes slowdown? Lending cutback because of 2a) increased caution / fear of default 2b) Fed paying interest on reserves

Loan to asset ratio (sample)

BankAmerica annual report ² We’ve also pledged to increase our own spending with small- and medium- sized companies by $10 billion over the next five years, because many small businesses told us their biggest challenge is not access to credit, but lack of demand*** for their products and services.

Our primary liquidity objective is to ensure adequate funding for our businesses throughout market cycles, including periods of financial stress. To achieve that objective, we analyze and monitor our liquidity risk, maintain ***excess liquidity and access diverse funding sources including our stable deposit base.

US Bank annual report However, although we are growing commercial loan commitments, business customers remain cautious, and many are not fully utilizing their lines of credit

US Bank In 2009, the Company grew its loan portfolio and increased deposits significantly, both organically and through acquisition,

US Bank Excluding acquisitions, average loans and deposits increased $7.7 billion (4.7 percent) and $19.0 billion (14.2 percent), respectively, over 2008.

U.S. Bank Despite this activity, the Company has experienced a decrease in average commercial loan balances as customers continued to pay down their credit lines and strengthen their own balance sheets.

Sentiment analysis Challenges: spin and boilerplate language