Dodd and Bernanke clash on subprime
The chairman of the U.S. Banking Committee has disputed Fed chief Ben Bernannke on the central banks’ protection of subprime borrowers.
The chairman of the U.S. Banking Committee has disputed Fed chief Ben Bernannke on the central banks’ protection of subprime borrowers.
“The chairman misspoke when he said that the Federal Reserve is ‘authorized’ to write rules by the Home Ownership and Equity Protection Act,” said Christopher Dodd, D-Conn., in a statement issued after Mr. Bernanke gave a speech on the topic yesterday.
“The law requires the Federal Reserve to write rules to protect home borrowers from unfair or deceptive practices.”
In his speech, Mr. Bernanke discussed the Fed’s steps toward protecting borrowers, such as disclosures for consumers and a hearing to curb predatory lending practices through the HOEPA legislation.
“HOEPA requires the Fed to write rules to protect homeowners, and they have not written those rules,” said banking committee spokesman Marvin Fast via e-mail.
“For far too many years,” said Mr. Dodd, “far too many risky and abusive subprime loans were made without a reasonable analysis of the borrower’s ability to repay the loan.”
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