Bernanke: Banks, consumers need to do more to spark economy

By WALTER C. JONES
Morris News Service
COLLEGE PARK, Ga. — Banks, consumers and private organizations need to do more to get the economy going, Federal Reserve Chairman Ben Bernanke said Thursday at a speech to a people attending a conference on the poor.
Bernanke stressed that the poor are hurt worse when the economy declines, noting that home ownership dropped more in poor neighborhoods as a result of the last recession.
“Since the peak in mortgage lending in 2006, the number of home-purchase loans extended to African Americans and Hispanics has fallen more than 65 percent, whereas lending to non-Hispanic whites has fallen less than 50 percent,” he said. “Home-purchase originations in lower-income neighborhoods have fallen about 75 percent, compared with around 50 percent for middle- and upper-income neighborhoods.”
He acknowledged that the current economy has left some people without jobs or job security. But with mortgage rates historically low and home prices still attractive to buyers, there should be more activity in the housing market.
Bankers have told the fed they aren’t lending more because of a combination of factors, from nervousness about the economy to government regulations. But they haven’t complained of a lack of money or a general unwillingness, he said.

So, the problem must be their credit standards.

Those standards needed to be tightened compared to what they were leading into the recession, he said, when people were able to get mortgages they couldn’t afford.

“However, it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery,” he said.

According to Bernanke, the Fed is doing its part to provide liquidity, stabilize the economy and restructure regulations where possible. In September, it issued a statement vowing to continue downward pressure on long-term interest rates.

He also offered a veiled threat against banks that discriminate against the poor, either by redlining neighborhoods or simply charging them more.

“The Federal Reserve has been vigilant in identifying and stopping such abuses, and we remain committed to vigorous enforcement of the nation’s fair lending laws,” he said.

The conference, billed as the Global Financial Dignity Summit, was sponsored by Operation HOPE, a 20-year-old, national organization that teaches money management to students and residents of low-income neighborhoods.

Bernanke called for other organizations, including the corporate side of the financial community, to step up efforts to increase financial literacy to guide people from making bad decisions and to build wealth that will cushion them against future recessions and lead their families out of poverty.



More Local

10 Things to Know for Today

Your daily look at late-breaking news, upcoming events and the stories that will be talked about today: 1. SOME 130,000 SYRIANS REACH TURKEY ... Read More


Hopeful journey to Colorado

Seizure patient seeking medical marijuana option

In early March, the Georgia medical marijuana bill was gaining steam and giving local families hope for prescriptive treatments for seizures ... Read More


Last chance to see two performers

The Coweta County Fair continues through Saturday, but Monday is the last chance to see two of the featured midway performers. Comedy hypnot ... Read More


Industrial Park expanding along I-85

Motorists on Interstate 85 southbound between Ga. Hwy. 154 and Bullsboro Drive have likely noticed the clearing alongside the interstate, ju ... Read More


Rosh Hashanah, Yom Kippur

Jewish High Holy Days start Wednesday

The Jewish High Holy Days start Wednesday, and Cowetans will be taking part in observances of Rosh Hashanah and Yom Kippur. Congregation B&r ... Read More

Ferst Foundation accepting registrants for ride

This year has been a successful one for the Coweta Ferst Foundation for Childhood Literacy. The non-profit organization provides age-appropr ... Read More