Current “qualitative inicators” show that “bank asset quality is deteriorating,” Federal Reserve Chairman Alan Greenspan is telling members of the Senate Committee on Banking, Housing and Urban Affairs.
“Supervisors therefore need to be more sensitive to problems at individual banks, both currently and in the months ahead,” reads the Fed chairman’s speech to the committee this morning, according to a transcript supplied by the Fed. “Some of the credits that were made in earlier periods of optimism — especially syndicated loans — are now under pressure and scrunity.”
These problems are concentrated both by industry sector and geography, he notes.
“The softening economy and/or special circumstances have especially affected borrowers in the retail, manufacturing, health care, and telecommunications industries [and] California utilities, as you know, have been under particular pressure,” he said.
Click here for complete Greenspan speech and appendix prepared by Federal Reserve staff members.