Fed Chief Urges Reforms In Asian Banking Practices
NEW YORK, Dec. 2-Federal Reserve Chairman Alan Greenspan tonight urged developing nations to move as quickly as possible to reform their banking systems, which he called ÛÏthe weaker links in our international financial system.ÛªÛª</br></br>In a speech delivered to the Economic Club of New York, Greenspan laid much of the blame for the current financial turmoil in several Asian nations on the way in which their governments failed to adequately regulate and supervise their banking systems, while at the same time directing banks to provide loans to favored borrowers.</br></br>"What is wrong with policyÛÓthat is, politically drivenÛÓloans? Potentially nothing if they were made to firms to finance expansions that just happened to coincide with a rise in consumer or business or overseas demand for their newly produced products,Û the Fed chairman said.</br></br>"Unfortunately, this is often not the case,Û he said. ÛÏPolicy loans, in too many instances, foster misuse of resources, unprofitable expansions, losses, and eventually loan defaults.</br></br>Huge losses on those and other types of loans, particularly those used to finance new real estate ventures, have crippled the banking See GREENSPAN, BX4, Col. 1