Bernanke Says Lending Spigots Are More Open Now
Federal Reserve Chairman Ben Bernanke said that many businesses and consumers are finding it easier to borrow as banks shore up their balance sheets.
Speaking by teleconference from Washington, he noted that the capital and liquidity positions of banks have been strengthened but he also said home mortgage lending continues to be very tight.
Bernanke said home mortgage credit outstanding with banks has contracted about 13 percent from its peak.
In response to criticism that regulators have made it difficult to lend, Bernanke said the Fed is taking a "balanced approach" in supervising banks.
"Many factors suggest that this situation will be difficult to turn around quickly, including the slow recovery of the economy and housing market, continued uncertainty surrounding the future of the government-sponsored enterprises and cautious attitudes by lenders," he added.
Bernanke said that banks have made "considerable progress" in shedding risk from balance sheets and building cash cushions against future loan losses. He said cash and securities holdings at large banks have doubled since 2009.
Bernanke's comments were prepared for delivery at a banking conference Thursday in Chicago.
Thomson Reuters contributed to this report.