August 03, 2007

Statement of Chairman Dodd on Today’s Announcement by American Home Mortgage and the State of the Mortgage Market

Washington, D.C. - “The continuing bad news in the mortgage markets ultimately means greater distress for families all across our nation. It highlights, once again, that regulators were too slow to react to subprime and other lending practices that were clearly unsustainable, particularly higher-risk adjustable mortgages that were underwritten with the full knowledge that borrowers could not afford the payments after interest rates started to rise. The regulators simply did not meet their responsibilities either to protect homeowners or to adequately oversee the safety and soundness of the system. The troubling news today should underscore in no uncertain fashion how important it is for the Federal Reserve to move expeditiously to put out strong new regulations under their existing authority to provide substantive protections, particularly to vulnerable borrowers while creating a clear standard so that mortgage lenders can get back into the market with confidence.”