The Fed slams the barn door shut:
"The Federal Reserve, acknowledging that home mortgage lenders aggressively sold deceptive loans to borrowers who had little chance of repaying them, proposed a broad set of restrictions Tuesday on exotic mortgages and high-cost loans for people with weak credit.
The new rules would force mortgage companies to show that customers can realistically afford their mortgages. They would also require lenders to disclose the hidden sales fees often rolled into interest payments, and they would prohibit certain types of advertising.
Borrowers would be able to sue their lenders if they violated the new rules, though home buyers would be allowed to seek only a limited amount in compensation.
“Unfair and deceptive acts and practices hurt not just borrowers and their families,” said Ben S. Bernanke, chairman of the Federal Reserve, “but entire communities, and, indeed, the economy as a whole.”
At least Bernanke got this right; if nothing else, he has that over Greenspan as Fed Chair.
Now, where did all those pesky horses go off to?
UPDATE: December 19, 2007 9:24am
Bloomberg gets the headline just right:
Fed Plans to Tighten U.S. Mortgage Rules After Crisis
In Reversal, Fed Approves Plan to Curb Risky Lending
EDMUND L. ANDREWS
NYT, December 19, 2007