Magazine article American Banker

Bernanke: No Silver Bullet for Underwater Borrowers

Magazine article American Banker

Bernanke: No Silver Bullet for Underwater Borrowers

Article excerpt

Byline: Donna Borak

WASHINGTON a One day after President Obama proposed a new plan to accelerate refinancings, Federal Reserve Board Chairman Ben Bernanke warned that no single government solution can by itself fix the housing crisis.

"There is no conceivable program that is going to put everybody in the country above water," Bernanke told reporters at a press conference following the two-day meeting of the Federal Open Markets Committee.

Bernanke's comments echoed a recent white paper by the Fed that, while urging policymakers to develop answers for the housing problem, shied from recommending one approach, which could be seen as going beyond the central bank's mandate.

"It's important to say our intent in that white paper is to provide the benefit of our analysis to those who will be making policy," he said. "We did not take specific stands on individual issues; what we did was try to provide the pros and the cons and provide some context for these debates."

He did not weigh in specifically about the plan Obama discussed Tuesday night in the State of the Union. The proposal a which would require congressional approval a would use fees paid by banks to support an expanded effort to get troubled borrowers into cheaper loans.

Instead, Bernanke reiterated the Fed's view that some measure is needed to address the housing problem, which is still holding back the economic recovery. That was partially made evident by the FOMC's decision on Wednesday to postpone lifting record-low interest rates any earlier than late 2014. …

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