Signs of an economic turnaround
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KAI RYSSDAL: Everybody who’s anybody in the Obama administration’s economic team got some face time with the boss today. The president met with his own advisers, with government banking regulators and with the chairman of the Federal Reserve this morning.
After his briefing the president said there are “glimmers of hope” in the American economy. He reported progress in bank lending, and easier credit for small businesses. He said stimulus spending is beginning to get down into infrastructure and energy projects. And he said he is keeping an eye on those banks. Our Washington bureau chief John Dimsdale has more.
John Dimsdale: The nation’s banks begin reporting their earnings for the first quarter of 2009 next week and the early indications are positive.
Scott Talbott: I think we’re beginning to see signs of life and restoration to the economy. It’s all beginning to work.
The banking industry’s Scott Talbott says the government-run stress tests confirm the sector’s financial strength.
Talbott: The stress test is a hypothetical test showing the worst case scenario. Even under those assumptions the bulk of the banks are passing the tests.
But a Treasury spokesman would not confirm any stress test findings. He says the government hasn’t told the banks what the tests show, and won’t issue any results until the end of April.
Goldman Sachs is signaling it will release positive earnings next Tuesday. The Wall Street Journal reports the bank is feeling strong enough to sell new shares to investors in order to pay back the $10 billion it borrowed from the government. But even with all the signs of stabilizing banks, President Obama said he remains cautious.
President Barack Obama: The economy is still under severe stress and obviously during these holidays we have to keep in mind that whatever we do ultimately has to translate into economic growth and jobs and rising incomes for the American people.
Some analysts wonder whether banks are taking too much advantage of recent accounting changes that allow them to value their bad assets at higher prices than the market is willing to pay. They say there will be a lot of skeptical scrutiny of next week’s earnings reports.
In Washington, I’m John Dimsdale for Marketplace.
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