SEATTLE - Federal Reserve Board Vice Chairman Roger W. Ferguson Jr. said Tuesday that banks and thrifts are well-positioned for an economic downturn because of their strong earnings and assets, but he warned them to keep a wary eye on the sharp rise in consumer debt.

The signs are mixed, he said in a speech at the annual conference of America's Community Bankers here.

On one hand, consumers in the strong economy are taking on more debt and making payments equal to about 13.75% of their disposable income. Mortgage payments have stayed basically steady in the past 15 years, at 5% to 6.25% of disposable income nationally. Declining mortgage interest rates have offset the effects of a rise in mortgage debt.

On the other hand, Mr. Ferguson said, the fact that people are loaded up with debt does not necessarily signify a problem, because gains in housing values and the stock market have raised wealth.

"Some households - particularly households without significant holdings of wealth - may experience difficulties in servicing their debt" if misfortune hits, Mr. Ferguson said. "Many households may be well situated to carry increased debt burdens."

Lenders must be prepared in case the economy sags and borrowers find themselves strapped, he said, however.

"The old adage that bad loans are made in good times reflects the reality that slowing income flows expose the inevitable mistakes," Mr. Ferguson said. "And such mistakes may induce both lenders and borrowers to overreact."

The Fed official urged bankers to review the effectiveness of their risk management models. He advised them to set aside more reserves for potential losses than their risk models recommend in order "to cover the losses that will emerge from time to time when investors suffer a loss of confidence."

He also cautioned against overreliance on credit-scoring models. These assume that past repayment performance is the best indicator of how loans will be repaid in the future, he noted. And they are generic, he said, because they are based on how borrowers nationwide repay loans, which does not account for economic conditions in particular states or communities.

Speaking earlier at the thrift trade group's conference, Office of Thrift Supervision Director Ellen Seidman encouraged community bankers to tap the growing immigrant population of mortgage-seekers. Community bankers also should focus on building long-term relationships with underserved black and Hispanic households whose incomes are rising, she said.

Ms. Seidman added that thrifts have an opportunity to serve small businesses because commercial banks are not paying as much attention to them.

In addition, Ms. Seidman announced two proposals her agency plans to issue Thursday - one to cut the time and cost for processing applications and another to create optional preapproved bylaws for federal thrifts.

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