Greenspan Urges Banks Not to Curb Lending

Federal Reserve Board Chairman Alan Greenspan warned that earnings and loan quality at some large banks will continue to suffer this year because of loose lending standards in the late 1990s. But in a speech to a banking conference in Las Vegas, Greenspan urged banks not to overreact by halting loans to qualified borrowers. “Lenders and their supervisors should be mindful that in their zeal to make up for past excesses they do not overcompensate and inhibit or cut off the flow of credit to borrowers with credible prospects,” he said, echoing comments he made in December. Greenspan didn’t discuss the U.S. economy or interest rate policy in his speech to the Independent Community Bankers of America, which he made from Washington via satellite transmission.