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Tuesday, February 10, 2009

JPMorgan Cuts Unused Credit as Banks Free Up Capital

By Michael J. Moore and Pierre Paulden

Feb. 10 (Bloomberg) -- JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp., the three biggest U.S. lenders, are among banks cutting back on $1.6 trillion of credit lines as they face increased demand for loans that threaten to drain capital.

Banks negotiated with retailers Rite Aid Corp. and Ethan Allen Interiors Inc., and with homebuilder Ryland Group Inc., in the past month to reduce credit limits and raise interest rates. After more than $1 trillion of writedowns and credit losses, lenders are moving to lessen the chance that troubled companies will withdraw funds.

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