Bernanke Suggests New Help for the Housing Market

Orlando, Fla.–Federal Reserve Chairman Ben Bernanke told conference attendees in Orlando, Fla. Monday that the current housing crisis “calls for a vigorous response,” The Wall Street Journal reports.Speaking at the Independent Community Bankers of America conference, Bernanke said homeowners–and the housing market–still need more help.”Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,” he said.Bernanke suggested reducing the principal on borrowers’ loans to help stave off foreclosures–a move he feels would be more effective than the current modifications, which include reducing loan interest rates.Other policy changes Bernanke suggested involved giving the Federal Housing Administration more leeway to determine underwriting standards and encouraging Fannie Mae and Freddie Mac to raise more funds.”New capital raising by the GSEs, together with congressional action to strengthen the supervision of these companies, would allow Fannie and Freddie to expand significantly the number of new mortgages that they securitize,” Bernanke said.