US Federal Reserve chairman Ben Bernanke Thursday signalled that the US banking system is stronger, but added that tight lending continues to constrain the mortgage market.
"Banks still have to do more to restore their health and adapt to the post-crisis regulatory and economic environment," Bernanke said in a speech at the Chicago Fed's annual conference on banks.
U.S. banks have surprised analysts with successive strong quarterly profits over the past year or so. But critics say many banks are sitting on their funds, wary about the sluggish economic recovery and
worried about the eurozone debt situation. The situation could help to erode President Obama's bid for re-election.
Banks are also resisting the U.S. government's tightening of bank oversight and financial risk in the wake of the 2007-09 recession.
JPMorgan's chief executive officer Jamie Dimon has led Wall Street
bosses in lobbying the Fed to relax the rules, which they say crimp their profitability.
"Credit conditions in the United States have improved significantly in a number of areas," Bernanke said. "Many -- though
certainly not all -- businesses and households are finding it easier to borrow than they did a few years ago."
Bernanke said that mortgage lending was especially hard hit, due to the slow recovery of the economy and housing and to "cautious attitudes by lenders."
The Federal Reserve is implementing rules intended to increase the capital of the country's largest financial institutions, passed in the Dodd-Frank Act which was the most sweeping reform of financial
regulation since the Great Depression of the 1930s.
Mitt Romney, who has all but clinched the Republican presidential nomination, has pledged to repeal the legislation, which he says has helped limit economic growth.
