USA Today points out:
Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.
• Lending fell. The amount of loans outstanding to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009, at banks that participated in TARP compared with a 6.2% drop at banks that didn’t.
• Employee pay rose. Average pay at banks getting aid rose 9.4% in the program’s first year. By contrast, non-TARP banks increased salaries 1.8%.
• Cost-cutting limited. Banks in TARP cut costs less than those outside the program. Government-aided banks increased branches by 2.7% while non-TARP banks cut branches by 1.2%.
This helps to confirm what I’ve been saying for many months: breaking up the too mega-banks will actually increase lending to small businesses and individuals.