Consequently, community banks retain 100 percent of the credit risk of these loans and have no incentive to make loans without regard to the consumer’s ability to pay.
In particular, necessary balance sheet adjustments in financial and non-financial sectors and persistent uncertainty will continue to weigh on economic activity. Later in 2013 economic activity should gradually recover. In particular, our accommodative monetary policy stance, together with significantly improved financial market confidence and reduced fragmentation, should work its way through to the economy, and global demand should strengthen.