Fed chair to Congress: Stay out of the mortgage crisis

WASHINGTON – Sept. 24, 2007 – Federal Reserve Chair Ben Bernanke asked Congress Thursday to limit its response to the mortgage crisis, saying that federal agencies are handling it.

“We are responding to the subprime problems on a number of fronts,” Bernanke said in testimony before the House Financial Services Committee. “We are committed to preventing problems from recurring, while still preserving responsible subprime lending.”

Bernanke said some legislative action may be acceptable, but Congress should tread cautiously. He recommended only expanding Fannie Mae and Freddie Mac temporarily – if at all – and urged that federal regulators, the Office of Federal Housing Enterprise Oversight, make the changes. He suggested that any congressional action should focus only on the Federal Housing Administration.

Rep. Barney Frank (D-Mass.), chairman of the panel, didn’t think that was enough. He repeatedly argued that tighter regulation could have averted the mortgage crisis.

“Appropriate, sensible regulation can help people be more confident about the economy,” said Frank, who noted that the House and Senate agree on the need for legislation to help resolve the mortgage crisis and expects a legislation package in the coming weeks.

Source: Investor’s Business Daily, Sean Higgins (09/20/07)

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