Kansas City Federal Reserve Bank President Thomas Hoenig said on Wednesday that an improving economy will likely make it possible for more banks to begin lending in greater volume.

Banks are going to be more cautious, and we need to see that change, and we will as the economy itself improves, he told a business audience after a speech.

Hoenig, facing angry questions about regulatory restraints on bank lending, said declines in the value of assets such as commercial property had made it necessary for many banks to raise more capital.

There is no restriction on that banker to make a loan that is sound if their capital position is correct, he said.

(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama and Dan Grebler)

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