Industry NewsMortgage

Bernanke says let market guide lending practices

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The Federal Reserve is considering using its rule-making authority to ban some mortgage lending practices as unfair and deceptive, but would prefer to issue guidelines and improve disclosures lenders provide to borrowers. That's according to Federal Reserve Chairman Ben Bernanke, who delivered his most extensive comments on problems in subprime lending in a speech today at a conference in Chicago. Bernanke and other federal banking regulators have been criticized by some lawmakers for alleged inaction in the face of a sharp rise in delinquencies and foreclosures in subprime mortgage loans. Bernanke acknowledged the trend, but said he remains convinced that market forces, not regulators, should have the greatest influence over lending practices. Bernanke said that there are some signs that market forces are already curbing the lending practices that contributed to the rise in foreclosures. Investors are scrutinizing subprime loans more carefully and lenders have tightened ...