A recent Bloomberg article notes that American commercial banks are hoarding record amounts of cash in relation to corporate loans. A steady decline in the ratio of cash to business loans—from around 60% in the 1970s to a low of 20% in late 2008—has reversed sharply over the past year. According to Federal Reserve data, banks hoarded an all-time high of 98 cents in cash for every dollar of existing corporate loans during the week of January 13th. The latest reading, for the week of February 3rd, stands at 95 cents.

A combination of weak demand from borrowers and risk aversion from lenders is to blame. In particular, banks are building cash buffers in anticipation of stringent new rules on reserve requirements, leverage ratios and the like. Annual growth in the balance of existing business loans has fallen for eight consecutive months. The credit crunch is far from over.