Reply #26: FedSpew: Bies says Fed concerned on bank lending standards

[UpInArms]

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-04-10T125317Z_01_WAT005254_RTRIDST_0_ECONOMY-FED-BIES-URGENT.XML

WASHINGTON, April 10 (Reuters) - U.S. Federal Reserve Governor Susan Bies said on Monday that banking supervisors were concerned that lenders might be relaxing some terms more than was healthy for them in order to make real estate loans.

In prepared remarks for delivery to a forum in Naples, Florida, sponsored by America's Community Bankers, Bies said underwriting standards seemed to be better than in the late 1980s and early 1990s.

"However, we have noticed some recent slippage," she said. "We also continue to monitor whether lenders routinely adjust covenants, lengthen maturities, or reduce collateral requirements.

"To be clear, we have not yet seen underwriting standards fall to unsatisfactory levels on a broad scale, but we are concerned about some of the downward trend in these standards," Bies said.

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