Economy Bernanke: Community banks stronger

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke said Thursday that the health of the nation's community banks has strengthened, despite what he described as a frustratingly slow economic recovery. In remarks to a conference on community banking, Bernanke said profits at smaller banks have been rising for the past several quarters. He also said the quality of the loans on their books has stopped deteriorating, although the proportion of bad loans remains high. "Measures of the financial conditions of banks appear to have strengthened somewhat, suggesting that, for the most part, the industry is meeting its challenges," Bernanke said. He said that the hundreds of community banks, those with assets below $10 billion, have also seen their capital reserves against future loses increase, in part because they can more easily raise capital. Bernanke defended the Fed's decisions to keep interest rates at record-low levels. While low rates have cut into bank profits, they have also boosted the economy. Published: Fri, Feb 17, 2012