So goes the old saw about bankers: they loan you an umbrella when the sun is shining, only to ask for it back when it rains.

But with our economy and markets in a world of hurt, the nation’s banks were supposed to stow their self-interest and help start lending again.

When the Troubled Asset Relief Program of the Treasury Department handed over $125 billion in taxpayer money to nine banks a month ago, they were supposed to lend to small businesses, home buyers and other worthy borrowers to keep the economy’s gears in motion.

At the time, the Federal Reserve Board and three bank regulatory agencies said: “The agencies expect all banking organizations to fulfill their fundamental role in the economy as intermediaries of credit to businesses, consumers, and other creditworthy borrowers.”

Alas, that admonition wasn’t accompanied by any real requirements to lend. When the Treasury gave taxpayer billions to the banks, it attached no strings. So is it any surprise that lending is tight?

Reports from institutional and individual borrowers across the country indicate this. Nervous lenders are demanding that even healthy loans be paid back. Banks and other financial institutions, meanwhile, are reducing exposures to borrowers and doing whatever they can to discourage the assumption of further debt.

Borrowers I have heard from don’t want to get into trouble with their lenders by speaking publicly about their experiences. As a result, they will remain nameless. But their stories are all the same.

The problem is, unless the government puts serious pressure on the nation’s banks to start lending, the value of assets used as collateral will fall as individuals and institutions everywhere are forced to sell.

http://www.nytimes.com/2008/11/23/business/23gret.html?_r=2&adxnnl=1&oref=slogin&pagewanted=print&adxnnlx=1227697329-zg0ARI8679yRaLB9yKzYYw

meanwhile …..

The US government has announced a rescue plan for troubled banking giant Citigroup after its shares plunged by more than 60% last week.

The US Treasury is set to invest $20bn (£13.4bn) in return for preferred shares in Citigroup.

The Treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.

The plan follows a $25bn injection of public funds in the bank last month.

Citigroup's market value fell to $20.5bn on Friday, compared with $270bn in 2006.

Last week the company announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced. It employs around 12,000 people in the UK.

Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses.

Citibank UK deposit holders are covered by the Financial Services Authority. The Financial Services Compensation Scheme guarantees up to £50,000 per Citibank account holder, should the bank go bust.

http://news.bbc.co.uk/2/hi/business/7745168.stm