Federal Reserve Chairman Ben Bernanke said on Thursday the U.S. banking system has made substantial progress toward becoming healthier since the financial crisis but noted there still were problem lending areas.
"Conditions in the banking system — and the financial sector more broadly — have improved significantly in the past few years," he told a banking conference in Chicago.
Speaking by teleconference from Washington, he noted that the capital and liquidity positions of banks have been strengthened but said home mortgage lending continues to be very tight.
Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans
Bernanke said home mortgage credit outstanding with banks has contracted about 13 percent from its peak.
"Many factors suggest that 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 and cautious attitudes by lenders," he added.
A return to the kind of lending standards that were prevalent before the 2007-2009 crisis would not be appropriate, Bernanke said. But he suggested conditions now were so tight that they were inhibiting lending.
"Current standards may be limiting or preventing lending to many creditworthy borrowers," Bernanke said.
Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans
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