Bernanke: Banks Are Too Restrictive On Lending

11532_benbernanke_square Bernanke: Banks Are Too Restrictive On Lending Federal Reserve Chairman Ben Bernanke has accused banks of becoming too restrictive in originating mortgages.

According to a Reuters report, Bernanke – addressing a Chicago banking conference via satellite – argued that although banks are in a healthier financial state today, they are nonetheless imposing highly restrictive parameters on loan approval.

‘To be sure, a return to pre-crisis lending standards wouldn't be appropriate,’ Bernanke said. ‘However, current standards may be limiting or preventing lending to many creditworthy borrowers.’

Bernanke warned that he did not foresee the situation becoming less restrictive in the near future.

‘Many factors suggest 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, the lack of a healthy private-label securitization market, and cautious attitudes by lenders,’ Bernanke said, adding that lenders remain skittish about dealing with borrowers with less-than-pristine credit.


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