Federal Reserve Chairman Ben Bernanke on Thursday told community bankers that he recognizes that the central bank's low interest rates hurts their profitability, but he added that the policy is necessary to drive the economic recovery
"A common complaint on the part of some community bankers is that very low interest rates hurt their profitability by squeezing net interest margins," Bernanke told community bankers at a Federal Deposit Insurance Corp. conference in Arlington, Va.
"It is necessary to set the negative effects on net interest margins against the positive effects of a strengthening economic and lending environment."
Bernanke also acknowledged concerns among small bankers that the Fed's examiners have been too tough, hurting their ability to lend
He said Fed supervisors must insist on high standards for lending, management and governance as a means of protecting banks from a "race to the bottom" and the creation of more problems down the road
Banks can make multiple appeals of supervisory decisions, he added.
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WASHINGTON (MarketWatch) - U.S. wholesale prices rose a seasonally adjusted 0.1% in January, spurred by higher costs of pharmaceutical drugs, light trucks and appliances, the Labor Department said Thursday. Economists surveyed by MarketWatch had predicted a 0.5% increase, largely because of rising gasoline prices. Yet a 2% increase in wholesale gasoline prices was more than offset by a drop in the cost of electricity and home-heating fuels, a result of unseasonably warm winter weather. Overall energy costs fell 0.5% in January. The wholesale cost of food, meanwhile, fell 0.3%, primarily because of lower prices for fresh and dry vegetables. Minus those two categories, so-called core wholesale prices rose a surprisingly sharp 0.4% - double the MarketWatch forecast for a 0.2% increase. Over the past year wholesale prices have risen an unadjusted 4.1%, the lowest year-over-year increase since January 2011.
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