Fed to focus on lenders
The Federal Reserve wants to protect consumers from another subprime debacle by imposing new rules on lenders. But some lenders say more restrictions might have a reverse effect. Nancy Marshall Genzer reports.
Eagle statue perched upon the Federal Reserve building in Washington, D.C. (Win McNamee/Getty Images)
More on The Economy
TEXT OF STORY
Renita Jablonski: The Federal Reserve is expected to announce new rules for lenders today. The Fed wants to protect consumers against shady lending practices that contributed to the subprime mess. But Ben Bernanke and company are caught between consumer advocates who want more regulation and lenders who say that could make the credit crunch worse. Nancy Marshall Genzer explains.
Nancy Marshall Genzer: The Fed is walking a fine line. It wants to curb predatory lending without hurting the financial system.
Roy DeLoach of the National Association of Mortgage Brokers warns if the Fed cracks down too hard, money for mortgages could dry up.
Roy DeLoach: Capitol will just end up going somewhere else in the marketplace. And therefore what that does is translates into higher interest rates for consumers.
But Jim Carr of the National Community Reinvestment Coalition says that's:
Jim Carr: Complete nonsense.
Carr says lenders will adjust to the new rules.
Carr: Lenders are in the business of making money by making loans, and they know what a good borrower is.
Carr says the wave of foreclosures expected next year are proof that the Fed has neglected consumers. He thinks that'll change though. Fed Chairman Ben Bernanke spearheaded the drive for the new rules.
In Washington, I'm Nancy Marshall Genzer, for Marketplace.
