Federal Reserve Chairman Ben Bernanke has urged US banks to keep raising capital so they can help the economy by expanding lending as the credit crisis wanes.
"I strongly urge financial institutions to remain proactive in their capital-raising efforts," Mr Bernanke said in the text of a speech in Chicago today. "Doing so not only helps the broader economy but positions firms to take advantage of new profit opportunities as conditions in the financial markets and the economy improve."
Bernanke said that the central bank is considering strengthening its guidance on risk management in the aftermath of the crisis and that senior bank executives need to take a leadership role.
The strongest banks didn't rely on credit ratings companies and accounted for the danger of a slump in access to funds, he said.
"I have been encouraged by the recently demonstrated ability of many financial institutions, large and small, to raise capital," Mr Bernanke said at a Chicago Fed conference on credit markets. Raising capital allows for more lending, "which supports economic expansion," he said.
He spoke a day after former Fed Chairman Paul Volcker warned that the Fed's rescue of Bear Stearns Cos. and acceptance of mortgage debt from bond dealers increased the risk of political interference.
US regulators, including the Fed, have begun an analysis of how markets and regulatory enforcement failed and led to the credit crisis.
Bloomberg