Harry Terris

As balance sheets and their funding needs recede, banks still hold advantages over money market funds.

At 31%, banks' share of financial sector lending is about what it was a decade ago, but the regulatory overhaul is among the factors that could change the mix.

If U.S. bank losses from the most recent crisis will total about 7% of assets, a "good-times" buffer of about 15% might be needed to keep them lending in the next one.

Second quarter releases amounted to maybe a third of earnings at the nation's banking giants, but attenuated defenses could lead to swings in the other direction if the economy worsens.

Even without a double dip, it took more than three years for household and business debt to recover to its level at the 1991 economic trough.

The gap between long-term and short-term instruments has delivered less of a lift to banks than in the past, and lower asset yields may now be catching up with lower funding rates.

Signs of a turn for the worse have been accumulating lately — among them, limp jobs reports and a string of downside surprises from major economic indicators on the heels of what had been a good run of consensus beats.

Analysts reckon that rapid implementation could propel another $600 billion to $1.5 trillion reduction in lending, and shave a percentage point off annual GDP growth.

Data covering 10 of the 12 weeks in the period suggests that loan balances continued to whither while deposits continued to grow.

This fall, chargeoff rates at the largest issuers could be 10% to 33% lower than the year prior, based on recent delinquency statistics.

Trust reports indicate big jumps in gross portfolio returns at Chase and Amex, slim gains at B of A.

As worrying as the European debt crisis is, American banks are at least less vulnerable to disruptions in short-term funding markets than they were in 2008.

The biggest banks continued to pay about half what the smallest banks paid for funding in the first quarter.

The industry's job losses have been concentrated in sectors that are likely to be down for the count.

Small business entered the recession with too much leverage compared with big business, some economists argue, and, in some respects, their debt burdens have gotten worse.

Consumer borrowing has dug into a trough that looks close to the pattern between the twin recessions in the early 1980s, but some analysts expect an uptrend soon.

Several major credit card issuers' portfolio yields dropped sharply in April, the second full month after key provisions of a landmark consumer protection law that is reshaping industry practices took effect.

Owner's equity in household real estate is down by more than 50% since its peak in early 2006, and home equity lending could be in for an even sharper decline.

Corporations accounted for the lion's share of deposit inflows in the second half of last year, but the tide might be turning.

Despite some signs that companies are easing up on defensive cash positions, the transition to a firming in loan demand could yet be months off.