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US Central Bank Chief Pledges to Help Struggling Homeowners

The Chairman of the U.S. central bank says his agency will do everything it can to help American homeowners who have been hurt in the mortgage lending crisis. VOA's Kent Klein reports from Washington.

Chairman Ben Bernanke says the Federal Reserve is doing whatever possible to give homeowners relief from a record number of home foreclosures, which have been causing further damage to an already-weak U.S. housing market.

"The Federal Reserve is strongly committed to fully employing our authority, expertise and resources to help alleviate this distress," he said.

Bernanke spoke Friday before The National Community Reinvestment Coalition, an organization that promotes affordable housing. He said the growing number of foreclosures and delinquencies have been caused by, among other things, irresponsible lending practices.

"However, far too much of the lending in recent years was neither responsible nor prudent," he said. "The terms of some subprime mortgages permitted homebuyers and inverstors to purchase properties beyond their means, often with little or no equity. In addition, abusive, unfair or deceptive lending practices led some borrowers into mortgages that they would not have chosen knowingly."

The Fed chief did not make any new recommendations on how to alleviate the crisis, but he outlined the steps the Federal Reserve has been taking in the past few months. Among them is a proposal to ban a series of unfair or deceptive lending practices.

"Our goal was to produce clear and comprehensive rules to protect consumers from unfair practices while maintaining the viability of a market for responsible subprime lending," Bernanke said.

Bernanke said the Fed has been working since 2006 to make this and other changes, including more tightly regulating the mortgage industry, cracking down on deceptive mortgage advertising and supporting efforts to reach troubled borrowers.

President Bush said Friday the recent problems in the housing market are at the core of the country's economic problems.

Mr. Bush rejected several ideas for fighting the problem, including allowing bankruptcy judges to change the terms of mortgages and allowing local and state governments to buy foreclosed homes.