From the Wall Street Journal:

Lending Falls At Epic Pace

U.S. banks posted last year their sharpest decline in lending since 1942, suggesting that the industry's continued slide is making it harder for the economy to recover.

While top-tier banks are recovering at a faster clip, the rest of the industry is still suffering, according to a quarterly report from the Federal Deposit Insurance Corp. Banks fighting for survival, especially those plagued by losses on commercial real estate, are less willing to extend loans, siphoning credit from businesses and consumers.

Separating the bad loans from the good, the bad banks from the good, was absolutely necessary. It was so essential that the US bite the bullet and not go the route of Japanification. But that's what we're trying to do and it's not going to work.