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Ben wrote:
> *Most people didn't hear it last week. Hear what?*
>
> *The "Bernanke bell" rang loud and clear.
>
> Last Wednesday, Federal Reserve Chairman Ben Bernanke said the following
> at the Independent Community Bankers of America Conference:
>
> "The rapid growth in commercial real estate exposures relative to
> capital and assets raises the possibility that **risk-management
> practices in community banks may not have kept pace with growing
> concentrations and may be due for upgrades**."
>
> *** This means that they are going to start putting pressure on "bad
> debt loan reserves" at banks. It also means that as this develops,
> loans are going to be harder to get and will cost borrowers more. _This
> will create a contraction problem in the economy and increase the
> chances that a recession will be the induced resul_t. Over time, this
> will also create a problem for bank earnings as they are forced to
> allocate more funds for higher risk loans. {NOTE: I used to be on the
> Board of Directors at The Regulatory Assistance Center, Inc. ... so, I
> know what the Bernanke statement means. What he is telling banks is
> this: "Start cleaning up your loans, get tougher, and start to allocate
> much higher bad debt reserves, or we will do it for you during your next
> bank examination."}*
>
> **** This warning and action from Bernanke supports why the Fed is
> flooding liquidity into the system. **The Federal Reserve has pumped
> money at an 8%+ growth rate during the last two months, and accelerated
> this to a growth rate that is over 20% during the last two weeks. This
> affects the market in a short term positive manner, but this is
> occurring with increasing negative market divergence and institutional
> selling.
>
> *
>
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