Federal Reserve chief told bankers on Friday that continuing to lend in the current economic environment was no inconsistent with maintaining good risk management and high underwriting standards.
Bernanke issued the comments at the Independent Community Bankers of America’s national Convention and Techworld in Phoenix, Arizona.
“I know that bankers--including community bankers--have expressed concern over some of the mixed messages they perceive are coming from the federal banking agencies in the current environment--particularly admonitions to continue lending at the same time that institutions are being urged to maintain adequate capital and prudent lending standards.
Bernanke cited a statement released by several federal agencies last November where it was emphasized that, “while rectifying past shortcomings in underwriting standards and other aspects of risk management, banks can and should continue to provide loans to creditworthy customers.”
The Fed’ examiners have been instructed to be aware of tighter credit and to encourage loans “provided such lending is based on realistic asset valuations and a balanced assessment of borrower’s repayment capacities.”
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