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Bernanke sees chance of recovery in 2010

Housing remains serious drag on economy

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If measures to prop up banks, prevent foreclosures and stabilize the financial system succeed, there is a "reasonable prospect" that the current recession will end this year and that 2010 will be a year of recovery, Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday. Federal Reserve policymakers expect unemployment to grow from 7.6 percent at the end of 2008 to nearly 9 percent by the end of the year before easing in 2010, Bernanke said in his prepared remarks to the Senate Banking Committee. Housing and mortgage markets have proved "a serious drag on the broader economy," Bernanke said. The downturn has hurt household wealth, and rising mortgage delinquencies have threatened the health of financial institutions. "Recent data show that residential construction and sales continue to be very weak, house prices continue to fall, and foreclosure starts remain at very high levels," Bernanke said in presenting the Fed's Semiannual Monetar...