WASHINGTON – Sandra Braunstein, director of the Federal Reserve System’s Division of Consumer and Community Affairs, yesterday told Congress “The impact of mortgage delinquency and foreclosure on consumers and communities is one of great concern” to the Fed, Bloomberg News reports.
“We have much work ahead of us, as there is no one sure and easy fix,” she said, testifying yesterday at a House Financial Services subcommittee hearing on subprime mortgages.
Braunstein said the Fed is considering new regulations to tighten lending standards, and also is examining the Home Ownership and Equity Protection Act of 1994 for “practices that are unfair or deceptive that we can write rules on.” But she added that fears of lawsuits stemming from the new rules “could end up … constraining credit.”
Federal Deposit Insurance Corp. Chairman Sheila Bair, speaking at the same hearing, urged the Federal Reserve Board to tighten its regulations. “The FDIC would strongly support the FRB should it decide to make greater use of the authorities provided by HOEPA to address predatory practices,” Bair said. “Many abuses might be more effectively addressed by regulation rather than statute, especially in areas such as misleading marketing, in which the manner and types of abuse frequently change.”
