Higher Interest Rates? Oh, my!

From David Ellis at CNNMoney: Who's afraid of rising interest rates? Banks!

Of all the things keeping bankers up at night these days, the direction of interest rates may soon rank up there with loan losses and the heavy hand of the government.

The Federal Reserve has kept the closely-watched federal funds rate between 0% and 0.25% in an effort to help jump start the U.S. economy.

expectations are growing that the nation's central bank will soon reverse its loose monetary policy stance in an effort to tamp down the threat of inflation.

The FDIC and other bank regulators, issued a stern waring to lenders about interest-rate risk...

"Regulators have a great deal of concern that this will be the next shoe to drop," said Bob Morgan, partner at Austin Associates, an Ohio-based boutique investment bank and advisory firm that caters to the community banking industry.

Banks are hoping that the Fed raises rates at a gradual pace, which would still allow them to enjoy the same kind of returns they have over the past year.

I just hope they do raise the rates gradually. With unemployment going to remain high for the next couple of years, we need to keep interest rates as low as possible to provide crucial lending to businesses.(What little credit there is out there at the moment). To the Fed: Please don't strangle hold the economy again.