Loans by banks taking U.S. aid fall by $42 billion

WASHINGTON (Reuters) - The U.S. Treasury Department said on Monday average lending from about 500 banks that have received government capital injections fell $42 billion in March compared to February.

In the first monthly lending report from its Capital Purchase Program, the Treasury said average loans outstanding from CPP recipient banks fell to $5.237 billion in March from $5.279 billion in February.

The CPP accounts for about $200 billion of the U.S. government’s $700 billion Troubled Asset Relief Program.

The lending report includes all banks receiving government capital investments and will be published alongside a monthly lending “snapshot” of the top 21 banks in the CPP.

Lending at these top 21 banks fell $38.8 billion or 0.9 percent from February to March, according to the report. Excluding the top 21, lending fell $3.1 billion, or 0.4 percent.

For all CPP participants, total average consumer loans outstanding fell 0.5 percent in March to $2.884 trillion, while commercial loans fell 1.2 percent to $2.353 trillion.

Reporting by David Lawder; Editing by Kenneth Barry