2.8% drop in lending is largest since 1984

It seems like the monetary policy in theory does not work in real life. Even though the policy rates are historically low, banks reduced the amount of money extended to their customers by $210.4 billion (2.8%) between July and September, cutting back in almost every category and this is the largest drop at least since 1984. "We need to see banks making more loans to their business customers," FDIC Chairman Sheila C. Bair said Tuesday. The government has been trying to impose number of programs, but so far has resisted calls to proceed. The FDIC said that just three new banks were created during the third quarter, the smallest number since World War II.