News By Bankrate.com

CONGRESS
Bernanke Defends Record During Senate Banking Committee Hearing
Federal Reserve Chairman Ben Bernanke yesterday defended his financial-crisis actions during a Senate Banking Committee hearing on his nomination to a second four-year term. "As severe as the effects of the crisis have been … the outcome could have been markedly worse … ," Bernanke said. "We played a central role in efforts to quell the financial turmoil, for example, through our joint efforts with other agencies and foreign authorities to avert a collapse of the global banking system last fall."

He explained the Fed created targeted lending programs that helped restart the credit flow in a number of credit markets, including the commercial paper market and the market for securities backed by loans to households and small businesses. "Taken together, the Federal Reserve's actions have contributed substantially to the significant improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the U.S. and foreign economies," he said.

Bernanke admitted to some lapses by the central bank, but said a hands-on supervisory function was crucial to its ability to safeguard financial stability. "We need to have the expertise, information and authority associated with a bank supervisor," he told committee members, some of whom want to strip the Fed of its power to regulate banks.

While Bernanke's nomination to a second term is expected to clear the Senate, the process could be delayed by senators who have placed holds on the nomination and are demanding the Senate first consider legislation requiring an audit of the Federal Reserve's monetary policy decisions. Read Bernanke's testimony. 

SMALL BUSINESS LENDING
SBA Issues Report on November's Small Business Financing Forum
The Small Business Administration yesterday issued its "Report to the President" summarizing the policy ideas and recommendations discussed at the administration's Small Business Financing Forum on Nov. 18. The report includes several ABA recommendations, including proposals extending the increased SBA 7(a) program loan guarantees and lower borrower fees established in fiscal year 2009, increasing the America's Recovery Capital Program's loan size, currently set at $35,000, and streamlining SBA paperwork and processes.

ABA, which participated in the forum as well as in yesterday's White House Jobs Forum, also continues to advocate that the government expand bank eligibility for its capital and small business lending initiatives and ensure that regulatory policy doesn't discourage banks from making good loans to creditworthy borrowers. Read more.  Read the report. 

AGRICULTURAL BANKING
ABA Posts Ag Conference Radio Interviews on Web Site
ABA has posted on its Web site radio interviews done by association Chairman Art Johnson, staff members, agricultural committee members, Farm Service Agency officials and various ag experts during last month's ABA National Agricultural Bankers Conference in San Antonio. The interviews, which aired on 2,040 radio stations nationwide, covered such topics as farm debt restructuring, new FSA farmer assistance programs, the economic outlook, new farm credit realities and stress testing for banks and farm customers. Listen to the interviews. For more information, contact ABA's John Blanchfield. 

IRS
IRS Lowers Standard Mileage Rates Slightly
The Internal Revenue Service yesterday issued its 2010 optional standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The business, medical and moving rates are slightly lower than last year, reflecting generally lower transportation costs. Beginning Jan. 1, the standard rates for the use of a car, van, pickup truck or panel truck will be 50 cents per mile for business purposes; 16.5 cents per mile for medical or moving purposes; and 14 cents per mile in the service of charitable organizations. Read more. 

ECONOMY
Productivity Soars in Third Quarter
Productivity, the amount of output per hour of work, rose at an annual rate of 8.1 percent in the third quarter, the largest quarterly increase since 2003's third quarter, the Labor Department reported yesterday. Meanwhile, labor costs fell at an annual rate of 2.5 percent.

The productivity gain was revised down from an initial estimate of 9.5 percent made a month ago, while the drop in labor costs was less than the 5.2 percent plunge first reported. The revisions were larger than economists had expected.

ECONOMY
Service Sector Contracts in November
The Institute for Supply Management's nonmanufacturing index that measures the economy's service sector slipped to 48.7 percent in November from 50.6 percent in October, ISM officials reported yesterday. The index's fall below the 50 percent mark indicates service-sector contraction after two months of growth. Read more. 

RATES
Mortgage Rates Drop to Survey Low
The average interest rate on 30-year, fixed-rate mortgages dropped to 4.71 percent this week from 4.78 percent last week, Freddie Mac reported yesterday. That is the lowest level the 30-year average rate has reached since Freddie Mac began its weekly survey in 1971, company officials said. A year ago, rates for 30-year mortgages averaged 5.53 percent.

BANK STOCKS
Bank Indexes for Thursday, Dec. 3
ABA NASDAQ Community Bank Index: 142.08; Change: - 1.59%
ABQI Index (actively traded community banks): 1,022.17; Change: -1.76%
KBW Large Bank Index: 42.29; Change: - 3.02%

ON THE LIGHTER SIDE
"A list of this year's 15 most commonly used words has been released. And it includes H1N1, deficit and health care. Not making the list this year -- Chrysler-mania." -- Conan O'Brien