Fed boss plays down US GDP growth spurt

Tim Wallace
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THE US ECONOMIC recovery has been “frustratingly slow,” despite recent indications that growth was returning, Federal Reserve chairman Ben Bernanke (pictured) said yesterday, as the US’s trade position deteriorated.

New data showed the current account deficit expanded unexpectedly in the final quarter of last year, hitting $124.1bn (£79.2bn) as exports dropped and imports rose. The deteriorating measure, which includes factors like government transfers as well as trade, showed a sharp fall in the investment surplus.

Meanwhile, speaking to an audience of community bankers, Bernanke said financial regulations like Dodd Frank were aimed at larger banks in an attempt to end the “too big to fail” era, and that he is working to clarify whether or not smaller community banks will be hit by the rules.

He said the goal is to prevent community banks from wasting time and money trying to figure out if a new regulation applies to them.

“Although this change seems relatively simple, we hope it will help banks avoid allocating precious resources to poring over supervisory guidance that does not apply to them,” Bernanke told the bankers.

Bernanke said the Fed is also taking steps to improve communications with small banks in a bit to better understand the challenges facing the industry, including the creation of a subcommittee to review how community banks are supervised.