Regulatory failures and not low interest rates were responsible for the housing bubble, implosion and current recession, Federal Reserve Chairman Ben Bernanke asserted on Sunday.
“Stronger regulation and supervision aimed at problems with underwriting practices and lender’s risk management would have been…more effective [in] constraining the housing bubble [rather] than a general increase in interest rates,” Bernanke told the American Economic Association. Bernanke, while awaiting Senate confirmation for another term as Fed Chairman, defended recent and continuing charges that the Fed contributed significantly to the current financial crisis by keeping interest rates too low for too long.
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