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A General Motors employee works on a van assembly line Thursday, Nov. 3, 2011, at GM's plant in Wentzville, Mo.
A General Motors employee works on a van assembly line Thursday, Nov. 3, 2011, at GM's plant in Wentzville, Mo.
(Jeff Roberson/AP)

FINANCIAL TIMES

Commercial and industrial loans rise, and with them, risk

Lex is a premium daily commentary service from the Financial Times. It helps readers make better investment decisions by highlighting key emerging risks and opportunities.

U.S. banks, large and small, are loosening their purse strings again. Not too long ago, they were rebuked for taking billions from the government but passing precious little of it on to job-creating business borrowers. Persistently low interest rates have given them reason to lend, though; increasing loan volumes is one way to offset lower interest margins (the difference between what banks make on loans and what they pay for deposits) at a time when investment securities are also paying next to nothing. Some banks have lot of real estate debt remaining on their books, making business loans an attractive diversifier.