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

Edgerton reads, sings, engages at local gathering

Clyde Edgerton read aloud, sang, laughed and clearly enjoyed being the second novelist to be part of the Anne Quinn Powell Authors’ Se ... Read More


Grantville mayor pro-tem

Gomez makes Georgia history

When Grantville Councilman Leonard Gomez was elected to serve as mayor pro-tem, he quietly made Georgia history. The appointment is a signif ... Read More


NTH 150th anniversary

Home of early publisher still stands

James A. Welch did not found The Newnan Herald, but he became part of the newspaper’s history before it was a year old. John S. Bigby ... Read More


Newnan Council

Ground floor apartments could be allowed

Ground level residences could be allowed in downtown Newnan, as the city council will discuss the option at its meeting on Tuesday. Newnan&r ... Read More


Newnan’s sole soup kitchen needs help

Perpetual Praise Community Resource Center in Newnan has plenty of food to continue feeding hot meals through its soup kitchen, called Savan ... Read More

Powell found characters from Edgerton’s ‘Egypt’

Anne Powell called her sister, Jane Quinn, and told her she had to read “Walking Across Egypt.” The 1987 novel by Clyde Edgerto ... Read More