Meanwhile in America… Federal Reserve Chairman Ben Bernanke is looking for stronger regulation of Mortgage markets in the US for Fannie Mae and Freddie Mac going so far as to suggest today that their holdings should be linked to a â€œmeasurable public purpose, such as the promotion of affordable housing.â€
His remarks come as worries about risky mortgages are making investors jittery. Those fears contributed to last weekâ€™s worldwide stock meltdown, where the Dow Jones industrials suffered a gut-wrenching 416-point plunge.
Lenders to subprime borrowers â€” people with blemished credit histories â€” have been battered. Rising interest rates and weak home prices have made it increasingly difficult for these borrowers â€” especially those with adjustable-rate mortgages â€” to keep up with their mortgage payments. Delinquencies and foreclosures in the subprime mortgage market are spiking.
Meanwhile his predecessor Alan Greenspan says today that there’s only a 1/3rd chance of the US falling into recession this year:
â€œWe are in the sixth year of a recovery; imbalances can emerge as a result,â€ Bloomberg quoted Greenspan as saying. â€œTen-year recoveries have been part of a much broader global phenomenonâ€
..and Treasury Secretary Henry Paulson says not to worry, the housing credit worries are ‘largely contained‘ and shouldn’t pose a huge risk to the rest of the US economy:
â€œThe global economy is more than sound,â€ Paulson said. â€Itâ€™s as strong in the last couple of years as Iâ€™ve seen in a lifetime.”
..so there you go, problem solved.