Bank loans have been shrinking since the first quarter of 2009, and holdings of debt securities have filled some of the hole.
But the shift to bonds has been modest as balance sheets overall have contracted, and cash levels — specifically reserves, which can only be held by depositories and some other entities like the government-sponsored enterprises — have soared, primarily as a byproduct of the Federal Reserve's emergency programs.
At the end of the third quarter of 2007 — the last full period before the official start of the recession — debt securities accounted for 19.6% of assets at bank holding companies, banks and savings institutions, according to data from the Fed — within the range of 19% to 21.7% that prevailed earlier in the decade.
At the end of 2008, when loans peaked, the figure had fallen to 17.7%, and it has since rebounded to 18.1% at March 31. (New accounting rules that forced the consolidation of securitizations swelled loans by about $400 billion in the first quarter and lowered the portion of assets consisting of securities by perhaps 0.4 of a percentage point.)
Meanwhile, the portion of assets made up of loans fell 8.7 percentage points from the third quarter of 2007 to 47.5% in the first quarter of this year.
