WASHINGTON (MNI) – The following is an excerpt from Federal Reserve
Chairman Ben Bernanke’s press conference Wednesday.

Question:

Hi, Mr. Chairman. Someone told me that less than 1% of all
mortgages originated in the past 18 months went to borrowers with
impaired credit history. So when we talk about people on a Main Street
policy, it seems like you’re struggling like many other central banks
and that’s to get the low rates down to the — the challenge is to get
them to people who really need them, people who are paying high rates or
companies with somewhat fragile balance sheets. So given that’s the
case, I mean, you guys got involved in markets when they were
dysfunctional in the crisis, what’s your appetite for doing more
targeted credit programs if post-election you had a treasury secretary
and a Congress that was willing to underwrite some of the credit risk?

Bernanke:

Well, now you’re talking about — about Congressional programs and
I don’t advocate specific programs. It’s up to them to make decisions. I
think we’re seeing modest improvements in mortgage markets. One thing
that’s helping is stronger housing market. One reason that lenders have
been very constrained is they’re worried about further house price
declines that will make the collateral worth less than the loan. As
house prices begun to rise, as the economy has gotten a little stronger,
lending standards have — have eased — have eased just a bit. There’s
other changes that are useful. I noticed the FHFA and the GSEs have
changed their policies on footbacks so banks will have more certainty
under what conditions a mortgage will be put back to them if it
defaults. So I think there’s a number of things in constraining that
will make the mortgage markets a little bit more open. And that is one
factor actually that could make our policy more effective rather than
less effective over time if — if more people have access to mortgage
credit, more people can take advantage of the low rates that we’re
providing.

** MNI Washington Bureau: 202-371-2121 **

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