Banks are increasing their purchases of U.S. government securities to pump up profits while lending to businesses languishes near the lowest levels since credit markets started to freeze almost three years ago.

Holdings of Treasuries and agency debt rose in each of the past five weeks, an increase of $63.2 billion, to $1.5 trillion, according to Federal Reserve data. At the same time, commercial and industrial loans grew less than 1%, to $1.27 trillion, and are down 23% from the record high in October 2008.

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