FDIC's Bair: Low Interest Rates Are 'Appropriate'

Monday, 08 Mar 2010 11:23 AM


A low interest rate policy is "clearly appropriate" due to the still struggling economy, a top U.S. bank regulator said Monday, while also expressing frustration that banks are not doing enough to get credit flowing.

Sheila Bair, chairman of the Federal Deposit Insurance Corp, said credit-worthy borrowers are still not getting enough access to loans, and more needs to be done.

"A policy of low interest rates is clearly appropriate given the struggling economy," Bair said in remarks to the National Association for Business Economics.

The Federal Reserve has vowed to keep borrowing costs ultra low for an "extended period." Most big banks that do business with the U.S. central bank believe it will raise the benchmark rate this year from the current zero, a Reuters poll showed.

She said a public spotlight needs to be shined on banks for having pulled back too far on extending credit.

Ramping up small business lending as a way to jump-start economic growth is a key policy initiative of the Obama administration.

U.S. bank regulators have repeatedly issued advisory notes to banks, urging them to extend prudent loans, but Bair said they should stop short of mandating the activity.

"If you cross a line and get into a situation where regulators are starting to order banks to lend, the history on that isn't good," she said.

The FDIC's more recent quarterly banking profile showed that loan balances industrywide declined another 1.7 percent, the sixth consecutive quarter of contraction.

Bair said Monday that smaller banks seem to be doing a better job than the larger institutions in making loans and maintaining loan balances.

The FDIC reported that large banks were responsible for 90 percent of the decline in loan balances during the fourth quarter.

"Clearly there was too much credit leading into this crisis and there had to be some pullback, but I am concerned with it moving too far the other way," she said. "It is frustrating."

© 2015 Thomson/Reuters. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Mali's Islamists Withdraw Cease-Fire Pledge

Friday, 04 Jan 2013 13:06 PM

Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they we . . .

Fmr. CIA Director Hayden: Iran Nuclear Crisis Gets 'Scarier'

Tuesday, 17 Jul 2012 18:11 PM

 . . .

Join Fmr. CIA Director for Special Iran Briefing, Assess the Danger

Friday, 13 Jul 2012 12:27 PM

 . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved