In his speech before the Dallas Regional Chamber on Wednesday,
Chairman Ben Bernanke placed the financial crisis largely in the past. He deemed the crisis "mostly behind us" as he pointed to stabilization and growth.
But housing and labor markets are still a problem, Bernanke said. Echoing the release of the Federal Open Market Committee's
March meeting minutes, he said signs of lasting recovery continue to elude the housing market, pointing to rising mortgage delinquencies and foreclosures. While layoffs have declined, he expressed concern over companies' hesitancy, adding that unemployment rate remains near its highest level since the early 1980s.
Federal Reserve Chairman Ben Bernanke
"More than 40% of the unemployed have been out of work six months or longer, nearly double the share of a year ago. I am particularly concerned about that statistic because long spells of unemployment erode skills and lower the longer-term income and employment prospects of these workers," Bernanke said.
Still, Bernanke estimated that economic growth supported by the Fed's accommodative monetary policy, would effectively reduce joblessness, albeit at a slow pace.
Also mirroring the recent FOMC minutes, Bernanke said inflation doesn't pose an immediate problem since pricing power remains weak.
The chairman identified the need for stricter regulations including restrictions on risk-taking at financial institutions and a way for the Fed and other agencies to catch threats before they spiral out of control and threaten the whole financial system. Included in that, is the rejection of the belief that some institutions are too big to fail.
At the Fed, Bernanke said they have been improving their oversight by adopting a more multidisciplinary approach, increasing cross-firm comparisons and expanding expert analysis.
"As we've been working to make our supervision more effective, we have also been taking care to ensure we do not inadvertently impede sound lending," he added. "Businesses need access to credit to maintain or expand their payrolls and make productive investments."
Following the speech, shares across the financial sector were mixed.
were all up by more than 2% and
Bank of America
was gaining 1.5%.
were down by 0.7% and 0.8%, respectively.
-- Written by Melinda Peer in New York