Geez, is he going to be even worse than Greenspan? Of course, he probably can’t find any other inflatable investment area to bail out housing, like the Green Weenie let housing do for tech stocks. And, Wall Street is trying to do, dumbly, do that on its own anyway.
Even with the expectation of more problems in this area, Bernanke repeated his belief that troubles in the subprime mortgage market are “unlikely to seriously spill over to the broader economy or the financial system.”
Bernanke acknowledged that problems in the subprime market can be traced in part to loose standards, which in some cases allowed people to get mortgages with little documentation.
Facing criticism from Congress about lax regulation in the subprime arena, Bernanke again said the Fed will consider tougher rules to crack down on abusive practices and improve disclosure.
“In deciding, we must walk a fine line: We have an obligation to prevent fraud and abusive lending; at the same time, we must tread carefully so as not to suppress responsible lending or eliminate refunding opportunities for subprime borrowers,” Bernanke said.
In other words, the Fed ain’t gonna do nothing, while playing pacifier for investors and taking credit for anything positive Big Ben can dig up.
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