DC Report: Lending Tight, Recovery Hopes Lowered

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Federal Reserve Chairman Ben Bernanke called on banks this week to make more loans to small businesses to help create more jobs and boost the economic recovery.

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At a conference in the nation’s capital, Bernanke said creditworthy borrowers are not getting the loans they need to expand and hire.

“Business owners cited credit lines and working capital as their most critical financial needs, followed by refinancing products that would permit them to take advantage of low interest rates. Many reported having had to resort to borrowing through their personal credit cards or from their retirement accounts.”

The jury is still out on why small business loans have dried up—some point to tighter lending standards while other cite less demand.

The recovery rate that we have right now is moderate, its just slightly above the long term sustainable rate so it's not going to create jobs at a very quick pace, “ said Federal Reserve Governor Elizabeth Duke .

CEOs of small and medium-sized companies have lowered their expectations for the recovery, according to the Vistage CEO Confidence Index for the second quarter.

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But the executives remain confident that over the next year they will increase revenues,  profits and hiring.

The index showed 36% of the CEOs expect economic conditions to get better -- 48% expect them to stay about the same -- and just 15% expect them to get worse.

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