Lenders and investors whose poor decisions helped foster the current deepening mortgage crisis in America should not expect all their mistakes to be absolved by the Federal Reserve, Ben Bernanke said. But the Fed chairman said the central bank will act to limit the fallout from the credit debacle.
Noting that delinquencies in adjustable-rate subprime mortgages are expected to rise, Bernanke said, "The Federal Reserve stands ready to take additional actions as needed to provide liquidity and promote the orderly functioning of markets."
The remarks from Bernanke served to bolster the opinions of many investors who expect the central bank to cut a key interest rate from the current 5.25 percent to 5 percent or lower, perhaps sometime in the next three weeks.
Speaking at the Federal Reserve Bank of Kansas City's Economic Symposium, held in Jackson Hole, Wyo., Bernanke provided an expansive view of the U.S. mortgage system, giving a thumbnail history of the industry since 1890 — including episodes of failure, and the policy adjustments undertaken to correct them.
The Federal Reserve's next scheduled meeting is on Sept. 18.
Read the Chairman's Remarks in Full:
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