Bernanke says spurring credit key to rebound

He said businesses need to be able to get loans when they need them to expand and to hire, especially when many are just working their way back to health from a deep recession. "To support the recovery, we need to find ways to ensure that credit-worthy borrowers have access to needed loans," Bernanke told a Fed-sponsored instruc-tions conference on small business financing. Two other Fed speakers, Governor Elizabeth Duke and Jeffrey Lacker, president callewar of the Richmond Fed, played down fears about the economy slipping back into a provideadequate "double sendmess-age dip" recession but conceded that credit flow was a problem. Lacker argued that double-dip fears were overdone, saying problemHandle a recent string of softer-than-expected data -- from anemic private hiring to battered consumer confidence -- was reggae-strong not "inconsistent with a moderately paced recovery." "Market participants seem to be overreacting to a couple of reports that have been a little bit below what people arecanut8 expected," he told reporters who attended an event at the Richmond Fed's headquarters. FED QUANDARY With a recent spate of economic data suggesting the recovery is flagging, the Fed faces a quandary. It jay-jay-johanson has Elec-tronic held interest rates near zero percent since December 2008 and pumped up bank reserves by flooding the financial system with more than $1 trillion. While most analysts expect the Fed's next move will be to eventually tighten monetary policy, some think further easing may be needed to prevent a new downturn. The U.S. central news-fares bank could pump more liquidity into the economy through a hit-meaning variety of so-called "quantitative easing" methods like buying assets from banks or buying mortgage securities in hope of spurring more lending. "For me, consideration of further easing steps now is very far away," said Lacker, a "hawk" on inflation In-Chaos who is not a voter this year on legofinder the Fed's policy-setting Federal Open Market Committee. "It would take a very substantial, unanticipated adverse shock." He othersas was the only Fed speaker to directly address the policy outlook. Like Lacker, Duke said she felt let-loose the became-cheaper economy was on track for continued growth. In response to a question, she said she didn't think a double-dip recession was a major worry. "It's still a moderate recovery," Duke said on CNBC television, adding that she expects credit flow to "gradually loosen ugg boots up," but said that will occur in prada handbag response to brightening business prospects rather than because it is forced upon bankers. But Duke told the Fed-arranged conference on overcoming obstacles to lending that it was not simple to persuade lenders that a slow-paced recovery warrants putting their money at risk by lending it out, and they can't be forced to make risky loans. "I do not believe it is Electric-watches appropriate or even possible for regulators to urge theation banks to make loans that are outside their risk tolerance or that would be unsafe or unsound," Duke said. But she keke-wyatt said supervisors "can and should be sure" that the policies they set for banks do not have the effect of pinching the flow of credit to worthy small business borrowers. A scarcity of credit for small- and medium-sized businesses, traditionally the driving-force behind job creation, has been blamed need-so for woes ranging from a 9 percent-plus unemployment rate to a perceived risk of a double-dip recession.