Big banks are raking in record profits. Yet lending is slowing down. Why?

Let's bust one of the economy's most persistent myths

Bank buildings.
(Image credit: Illustrated | MICHAEL KAPPELER/AFP/Getty Images, KAREN BLEIER/AFP/Getty Images, JUSTIN TALLIS/AFP/Getty Images, ChrisGorgio/iStock)

As banks reap ever greater returns, a curious disconnect has emerged. Profits are rising, but lending is not.

"JPMorgan Chase, Citigroup, and PNC all reported another quarter of healthy profits, most of which will end up in shareholders' pockets," The New York Times reports. "Overall, lending at the four banks grew only 2.1 percent in the second quarter from a year earlier." That's down from an increase of 3 percent in the first quarter and 4.6 percent in 2016. This lending slowdown has many analysts scratching their heads: How can banks rake in more money if they aren't issuing more loans?

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.