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Bernanke: Worthy Borrowers Being Turned Away By Banks


Conditions in the banking sector have improved significantly in the past year, according to the the nation's top central banker.

"Since the financial crisis, banks have made considerable progress in repairing their balance sheets and building capital," Federal Reserve Chairman Ben Bernanke said Thursday in Chicago.

Speaking to the 48th Annual Conference on Bank Structure and Competition, Bernanke assured that most of the biggest U.S. banks would likely have sufficient capital to withstand another financial meltdown.

His assessment of the health of the U.S. banking system was generally positive, but Bernanke cautioned that lenders are having a harder time turning a profit than they did before the crash of 2008.

Some of this stems from banks' own reluctance to meet demand for mortgage loans.

"To be sure, a return to pre-crisis lending standards for residential mortgages wouldn't be appropriate; however, current standards may be limiting or preventing lending to many creditworthy borrowers," Bernanke noted.

Although tighter regulations and lingering weakness in the broader economy may be preventing a more robust recovery, signals point to continued stabilization for the banking sector.

"A number of key systemic risk measures that evaluate the potential performance of firms during times of financial market stress have improved in recent months," Bernanke added. "These indicators of systemic risk are now well below their levels in the crisis, and, overall, they present a picture of a banking system that has become healthier and more resilient."

by RTTNews Staff Writer

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