March 02, 2007

Chairman Dodd's Statement on Regulators’ Decision to Protect Subprime Borrowers

“Two weeks ago, I told Federal Reserve Chairman Bernanke that the federal regulators had given an inadequate response to the December 7, 2006 letter several of my Committee colleagues and I sent them. That letter urged the regulators to extend the exotic mortgage guidance to subprime hybrid adjustable rate mortgages (ARMs). Today, we got the right answer. The federal regulators have taken a vital first step to provide subprime borrowers with the same protections they have already extended to prime borrowers. The state regulators have already indicated that they intend to quickly follow suit. I commend the regulators for this proposal. I also want to urge them to move as quickly as possible to finalize the new guidelines. As I have said many times, this is a responsible standard that ensures that subprime borrowers will have the ability to repay their loans, thereby preserving homeownership and protecting their hard-earned home equity. It also helps protect the safety and soundness of the lending institutions themselves. I hope everyone in the market will quickly embrace these new guidelines, so we can move forward and work together to address the looming foreclosure problems that may lie ahead.”