Bernanke has issued a statement on the mortgage industries subprime troubles and potential impact on the economy. Here it is and I will try to comment on it later today.
“At this juncture … the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,” Bernanke said in testimony to Congress’ Joint Economic Committee.
It marked Bernanke’s most extensive discussion yet of the mounting problems in the risky mortgage market. Those troubles raise “some additional questions about the housing sector,” which has been mired in a deep slump for more than a year, Bernanke said.
Fallout in the risky mortgage market is clobbering some lenders and homeowners and has stoked concerns on Wall Street, Capitol Hill and elsewhere.
So-called “subprime” lenders who make home loans to people with blemished credit histories or low incomes have been battered. Weak home prices and rising interest rates have made it increasingly difficult for borrowers to keep up with their payments. Delinquencies and foreclosures in the subprime mortgage market are soaring.
“Although the turmoil in the subprime mortgage market has created financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear,” Bernanke said.
The crumbling housing market has been a major factor behind the slowdown in the U.S. economy. Bernanke said the “near-term prospects for the housing market remain uncertain.”
Even so, Bernanke stuck with the Federal Reserve’s assessment that the economy is likely to grow at a moderate pace over the coming quarters. He also repeated the Fed’s belief that inflation also should ease in the months ahead.
Bernanke: Mortgage Woes Not Spreading: Financial News – Yahoo! Finance.
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