Federal Reserve chairman Ben Bernanke has admitted he is wary of bank profits but admits confusion over gold prices.
Speaking at the Senate Banking Committee, Bernanke moved quickly to allay concerns that US banking giants have recently been recording large jumps in profits.
Bernanke said: “We are quite aware of these portfolios and we are addressing them in at least two ways.
“We have just finalised new capital requirements that banks have to hold against these securities for sale which should provide protection. We have also carried out stress tests where we assume that December 2008 kind of shock hits scenarios to make sure banks have enough capital to protect themselves against big losses.”
Bernanke also reiterated his desire and continued efforts to see the Volcker rule implemented as part of this campaign to monitor bank levels.
When asked about the recent drop in gold prices and what impact quantitative easing would have on it, Bernanke said: “Gold is an unusual asset. No one really understands gold prices and I do not pretend to understand them either.”