Washington ? U.S. banks hit by troubled loans during the past several years have been able to weather the recession and stay in good health, Federal Reserve Chairman Alan Greenspan said Monday.

That’s because banks had solid balance sheets going into the slump and benefited from increased diversification. That allowed them to better spread their risks across a wider range of customers and to broaden their sources of funding, Greenspan said.

“Our banks have been able to retain their strength in this business cycle, in contrast to the early 1990s when so many either failed or had near-death experiences,” Greenspan said in a speech delivered via satellite to the American Bankers Assn., which was meeting for its annual convention in Phoenix.

A copy of Greenspan’s remarks was distributed in Washington.

“That banks had impressive earnings and balance sheets going into the current period of stress is of key significance,” Greenspan said. “Some banks also benefited from the increased diversification and scale of their operations that had resulted from previous consolidations.”

Improved risk management techniques and technology also helped, Greenspan said.

Another factor that played a role in banks’ resilience during the slump was that the recession itself was mild and its main source of weakness came from cutbacks in spending and investment by businesses not by consumers, the economy’s main engine, Greenspan said.

Although the stock market slide made it much more difficult for some companies to repay bank loans and other debt and made companies wary of making big commitments to capital spending, the story was different for consumers, Greenspan said.

Low mortgage rates, a refinancing boom that left people with extra cash and rising home values have motivated consumers to keep spending, helping to offset other potentially negative factors, including the rollercoaster stock market, the lackluster jobs market and eroding consumer confidence.

“Consumer and mortgage loans have not suffered the sharp run-up in delinquencies that loans in the business sector have, and they contributed significantly to the earnings of the banking system, providing it with the ability to absorb losses elsewhere, to maintain loss reserves and still show significant profits,” Greenspan said.