NEW YORK (CNN/Money) - The U.S. banking system is strong, having weathered a recession, large corporate bankruptcies and competition from other financial institutions, Federal Reserve Chairman Alan Greenspan said Tuesday.
In remarks delivered to the American Banking Association convention, Greenspan did not make any mention of the current state of the economy or give any insights about the central bank's interest rate hike plans. Instead, he focused on regulatory and industry issues.
Greenspan reminded the bankers of troubled times in the past, including the savings and loan crisis, during which more than 1,000 thrifts went out of business.
"As time passes, more and more bank managers will not have the first-hand memories of times of banking stress," he said.
But he said advances in risk management, securitization of loans and other advances of the past couple of decades have left the industry in good shape to weather the problems caused by recessions, technological changes and increased competition.
"By any measure, banking in the United States today is strong, vibrant, and profitable," he said. "Under the circumstances, the present health of banking is a dramatic testament to both the management skills of bankers and the ability of regulators and legislators to adapt, albeit slowly, to change."
Greenspan said the changes in the industry had allowed banks to weather the largest corporate defaults in history at WorldCom and Enron, as well as the largest default by a nation -- Argentina -- without significantly hurting the capital of any individual bank. But he said new rules and regulations being developed are important as more and more executives come into the industry who do not remember banking crisis of the past.
"The improving bank practices, coupled with the new rules, hold out the hope of a safer and stronger banking system contributing to a more stable economy," he said.