>>>Demand for loans, meanwhile, continued to be weak. Cuts in capital investment and inventory building have dampened demand for loans. The Fed said a gulf in merger activity has cut into demand for credit -- particularly at domestic branches of foreign banks -- to fund those deals.
About 40 percent of domestic banks reported weaker demand for loans from large- and medium-sized firms over the past three months, and no bank reported increased demand from those customers.
The percentage of foreign banks in the U.S. reporting weaker demand more than doubled to 44 percent from 20 percent in January.
On the household side, 6 percent of domestic banks said they had tightened standards, down from 10 percent in both the Fed's January and October surveys.
About 17 percent of banks reported stronger demand for residential mortgages, up from 8 percent in January. But the percentage of banks reporting increases remains well below the prevailing levels of 2002.
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