Tags: FED | FEDERAL RESERVE | DUKE | LENDING | BANKS | BANKING | FINANCIALS

Fed's Duke 'Somewhat Optimistic' on Bank Lending

Wednesday, 31 Mar 2010 02:49 PM

A top U.S. Federal Reserve official Wednesday expressed guarded confidence that banks would step up lending as the economy improves.

"Improvements in a number of the conditions that depressed lending in 2009 ... lead me to be somewhat optimistic that we will begin to see an increase in bank loans later this year," Fed Governor Elizabeth Duke told a bankers' conference.

Duke said declines in loans outstanding are of "great concern" to the central bank and urged bankers to work with bank supervisors to reverse that trend.

Financial conditions have improved in some markets in recent months, but the banking sector continues to be under strain, Duke said.

The rate of bank failures appears likely to remain elevated for some time, she said.

Total loans in the banking industry fell 7.5 percent during 2009, the largest full-year decline since 1942, and restricted access to credit is a worry as the economy slowly recovers from the worst financial crisis in generations.

A variety of government programs have been put in place or are under consideration to increase bank credit.

"A number of different approaches may be needed to address the different barriers to bank lending," she said.

Duke said there is also simply less demand for credit by sound firms. Also, small businesses are hurt by tight conditions for consumer credit in addition to difficulty in obtaining business credit, she said.

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A top U.S. Federal Reserve official Wednesday expressed guarded confidence that banks would step up lending as the economy improves. Improvements in a number of the conditions that depressed lending in 2009 ... lead me to be somewhat optimistic that we will begin to see...
FED,FEDERAL RESERVE,DUKE,LENDING,BANKS,BANKING,FINANCIALS,ECONOMY,LOANS
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