May 17, 2007

Statement of Senator Dodd in Reaction to Bernanke Speech at the Chicago Federal Reserve Bank Conference

“The Chairman misspoke when he said that the Federal Reserve is ‘authorized’ to write rules by the Home Ownership and Equity Protection Act (HOEPA). In fact, the law requires the Federal Reserve to write rules to protect home borrowers from unfair or deceptive practices. For far too many years, far too many risky and abusive subprime loans were made without a reasonable analysis of the borrower’s ability to repay the loan. The result has been a record increase in foreclosures across the country, with more increases predicted. It is past time for action. I welcome the Board’s decision to hold a hearing, and urge the Board to move expeditiously to promulgate a rule. As Mr. Bernanke says, such a rule would create a federal standard for all home loans. This is an outcome to be welcomed, not avoided. By fulfilling its obligation under law to protect homebuyers, the Fed can make an enormous contribution to preserving the American dream of homeownership.”