US Banks Face Problem of Toughening Loan Allocation Terms: Expert

Business Materials 1 April 2008 18:05 (UTC +04:00)

Azerbaijan, Baku, 1 April / corr Trend A.Badalova / The United States intend to hold large scale reforms in the finance regulating system, Henry Polson, the US Finance Minister stated. New reform envisages considerable expansion of authorities of the US Federal Reserve System, as well as establishment of new federal bodies. In accordance with the reform, the control over the banking sector will be carried out by the authorized agency of the FRS instead of existing five.

According to some suppositions, the conduct of reforms has direct relation to the US financial crisis, whilst the country's authorities confirm the opposite, urging that the reform is not related to the credit crisis.

According to Alexander Potavin, the deputy chairman of Analytical Management Department of the investment company, the head of the US FRS Ben Bernanke brought down huge amount of money from the US financial system, preserving the stock places from the collapse.

"We can feel the economic efficiency from the flow of cash money with traditional 4-6-month long delay, because the economy of any country is very inertial," Potavin told Trend on1 April.

He said that amid apparent money abundance some American banks face the problem of toughening the loan allocation.

"For that reason banks do not decide on active allocation of loan, whereas consumers are afraid of taking them, with the consideration of loss of confidence in the future," he said.

In accordance with the report by the investment bank Goldman Sachs, the world economy will sustain $1.2trln loss as a result of the mortgage crisis. So, 40% of the global loss or $460bln will fall on US banks, broker companies and other financial institutes. Goldman Sachs urges that American financial institutes have announced the loss of approximately $120bln, which they sustained since the beginning of credit crisis.

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