877-861-2210Bernanke Defends Fed For Keeping Interest Rate Low, Says Community Banks Strengthened
By
Biz2Credit Advisor
Ben Bernanke, the Federal Reserve Chairman, in a statement said that there is sign of strengthening of nation’s community banks amidst a frustrating economic recovery. Bernanke, while attending a conference on community banking organized by Federal Deposit Insurance Corp, said that for several quarters, profits scaled higher at smaller banks.
Quality of loans to small businesses has not deteriorated any further. Financial condition of community banks appeared to strengthen as the lending industry is meeting challenges. Capital reserve of hundreds of community banks have grown and this includes even banks having less than $10 billion assets.
Community banks, however, have a complaint that very low interest rate is a hindrance for their profitability as it just squeezes net interest margins. Fed’s decision to keep interest rate at record low level is defended by Bernanke. The reason for that is though low interests have cut bank’s profits but then it also helps to boost the economy. And a fast growing economy ultimately results in profits for banks. Bernanke also gives the same explanation to defend Fed against criticisms that its low interest rate in hurting savers on fixed incomes.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to info@biz2credit.com
