U.S. banks are in better shape than they were a few years ago to handle any potential credit shocks from Europe, with greater capital and liquidity buffers now in place, said William Dudley, the president of the New York Federal Reserve Bank, on Wednesday.
U.S. banks are in better shape than they were a few years ago to handle any potential credit shocks from Europe, with greater capital and liquidity buffers now in place, said William Dudley, the president of the New York Federal Reserve Bank, on Wednesday. "I think we are in much better condition than we were in the past," Dudley said. U.S. bank exposure to the euro-zone periphery "is actually very modest," he said, during a discussion on the regional economy at the New York Fed's headquarters in lower Manhattan. This does not mean that the U.S. would be completely insulated from any type of crisis stemming from Europe, he noted, particularly if banks refuse to lend to each other out of a concern for counter-party risk, he said. If that happened, it would affect the U.S. economy, he noted. Dudley said it was hard to gauge the current strength of the U.S. labor markets given the unusually warm weather in the first three months of the year. Job gains were strong in the winter and faltered a bit in the spring. It may take more than a few monthly reports to ascertain whether the weaker spring reports were just payback for the winter strength or just the start of a more sizable slowdown, he said. "I still think the underlying pattern...is we're seeing a gradual strengthening," he said.
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