Federal Reserve Chairman Ben Bernanke said the stress tests performed on 19 major banks already appear to be helping banks gain access to private capital, at the Federal Reserve Bank of Atlanta 2009 Financial Markets Conference in Jekyll Island, Georgia.
Despite his optimistic outlook, Bernanke says it will be “some time” before it is possible to say whether the exams, which put bank’s portfolios through less than favorable circumstances, will fully re-establish investor confidence.
The Fed and other regulators announced last week that 10 of the 19 firms tested would nee to raise an additional $74.6 billion to be adequately buffered against the worst-case economic scenario, according to CNNMoney.com.
“We hope that in two or three years we will be able to reflect on the banking system’s return to health with a sharply diminished reliance on government capital,” he said.
Bernanke shifted his focus to the dollar, saying that he believes the dollar will retain its value. “I think the dollar will be strong. I think it will be strong because the U.S. economy is strong. And it will also be strong because the Federal Reserve is committed to assuring that we have price stability,” he said at the conference.
He added that the Supervisory Capital Assessment Program will help regulators improve supervisory processes as well as accomplish a more “fine-grained view” of the health of the banking system. He believes that in two to three years, the U.S. banking system will be restored to health. He assured the public that banks have been evaluated thoroughly to ensure enough capital to withstand future losses should the recession be worse than anticipated.