Europe tops nearly everyone’s list of threats to the global economy, and the European Central Bank (ECB) has finally turned its bazooka on the festering crisis by providing $640 billion of three-year funding to the Continent’s banks.

Yet through it all, lending by European banks’ operations in the U.S. has continued apace.

Lending by foreign institutions in this country has increased almost 15% since midyear — when deposits began to stream out of the entities — to a seasonally adjusted $662 billion at Dec. 7, according to the most recent data published by the Federal Reserve. That includes a 3% increase in commercial and industrial loans, to $247 billion.

The outflow of deposits, including a 15% drop in large time deposits — the foreign entities’ largest single source of funding — to $776 billion, did cause a 19% contraction in assets to $1.7 trillion. But most of that was accomplished by running down holdings of cash, which appears to have largely been deployed in a thin-margin arbitrage play on interest paid on excess balances booked at the Federal Reserve. (The dollars that fled European banks have landed, sometimes painfully, at U.S. banks, which generally have little appetite for additional liquidity.)

The relative stability in business lending by foreign-related institutions — an important source of financing for trade and infrastructure — is comforting, but hardly the whole picture.

For one thing, C&I lending at domestically chartered banks has increased more than 5% since midyear to $1.1 trillion, suggesting that the foreign entities are having trouble keeping up with available opportunities.

Moreover, U.S. branches and agencies of foreign banks and Edge Act corporations account for just a fraction of their parents’ activities. Such operations have become a financing drain on home offices, requiring about $200 billion of funding at Dec. 7.

By contrast, even during the throes of the late-2008 global financial crisis, the foreign entities had “continued to export dollar funding,” said Joseph Abate, an analyst at Barclays Capital.

The data excludes domestically-chartered subsidiaries of foreign companies, such as Sovereign Bank, which is owned by Banco Santander, in Spain. The figures also include foreign institutions outside of Europe, but it’s reasonable to think the wild swings in deposits reflect the jitters in the euro zone and the money markets.

The ECB’s latest funding program comes on top of a coordinated move with the Federal Reserve this month to expand currency swap arrangements, in which the Fed lends greenbacks to the ECB which relends them to European banks. With all this money being thrown at them, the worst of the dollar crunch for European banks could be past. If so, the worst of it wasn’t all that bad, as far as U.S. borrowers were concerned

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.