WASHINGTON, March 21 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke said the financial crisis in Europe has caused mostly indirect pain to the U.S. economy, but that risks were easing.
The sovereign debt crisis that has been most pronounced in Greece -- although it has spread to other nations -- has hurt the United States less through direct loss on investments in European government debt than it has through a loss of business, Bernanke said to members of the House panel on Government Oversight and Reform.
"The European Union accounts for roughly one-fifth of U.S. exports of goods and services. Not surprisingly, U.S. exports to Europe over the past two years have underperformed our exports to the rest of the world," Bernanke said.
"Weaker demand" from Europe has hurt U.S. companies, he said. The financial crisis has also put some strain on U.S. financial institutions. Moreover, he said, the crisis has undermined investor confidence.
Europe's financial troubles have indirectly led to "decreased stock prices … increased costs of issuing corporate debt, and reduced consumer and business confidence," he said.
However, 19 of the largest U.S. banks have just been assessed by regulators with what has commonly been called bank "stress tests."
"The results show that a significant majority of the largest U.S. banks would continue to meet supervisory expectations," in the event that the debt crisis in Europe continues or gets worse.
Bernanke praised the European Central Bank for relaxing collateral rules and reserve requirements to help banks in Europe to continue lending.
The U.S. central bank at its peak pumped $109 billion into the European financial crisis through extended swap line arrangements with several central banks in Europe.
"I would add that the swaps are very safe from the perspective of the Federal Reserve and the U.S. taxpayer," he said.