Bank shares rose in Japan and Europe for the second consecutive week, but the KBW US bank index fell nearly 2% after increasing 4.6% in the last week of March. Emergency borrowing from the Fed remains elevated ($149 bln vs. $153 bln). Bank lending has fallen sharply (~$105 bln) in the two weeks through March 29. This appears to be a record two-week decline. Commercial and industrial loans had fallen a little in the first two months of the year (before the bank stress become apparent). At the same time, the Fed's balance sheet continues to shrink. Over the past two weeks, it has fallen by a little more than $100 bln. ... (full story)