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Banks Have a Mountain of Deposits So They Don’t Need PPP Funding

  • Firms got just $49 billion from Fed while loaning $511 billion
  • Deposits at U.S. banks grew $1.8 trillion in last two months

A record surge in bank deposits has given U.S. lenders more cash than they know what to do with. One thing they don’t need: help from the Federal Reserve to fund the government-backed loans they made to small businesses.

Banks had tapped only $49 billion from the Paycheck Protection Program Liquidity Facility by May 27 as they loaned $511 billion, according to the central bank and the U.S. Small Business Administration. That’s largely because lenders are sitting on $1.8 trillion of new deposits that have flooded in since March 11 -- a 13% increase, and the biggest two-month jump since at least 1973, when comparable data is available.