Dodd: Fed was to slow to act on mortgage crisis
By CHARLOTTE EBY,
Globe Des Moines Bureau DES MOINES —
Democratic presidential hopeful Chris Dodd on Monday criticized the Federal Reserve Board for failing to respond quickly enough to the mortgage crisis that has rocked Wall Street.
Dodd, who serves as chairman of the Senate Banking Committee, said the Fed reacted late to the problem and “dropped the ball entirely.”
“They had a responsibility here they did not fulfill,” Dodd said at a campaign event in Des Moines.
Dodd, a U.S. senator from Connecticut, is set to meet today with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson about the problem.
Dodd said the Federal Reserve was required by a law in 1994 to protect consumers from fraudulent, deceptive behavior regarding mortgages, but did nothing in 13 years.
He said a regulatory scheme should have been in place a long time ago.
“More needs to be done with brokers and the credit-rating agencies, in my view,” Dodd said.
Homebuyers who signed up for sub-prime mortgages aimed at people with less than stellar credit histories have faced a wave of foreclosures.
Dodd said some consumers were lured into financial arrangements they couldn’t possibly maintain.
“It was criminal what they did to people here,” Dodd said.
Dodd said up to 2 million people could lose their homes, causing a ripple effect throughout the economy.
Dodd said Fed staff has told him for more than three years the problem was growing and the Republican-controlled Congress paid no attention to it.
Dodd said the government should be working to provide relief to people who will be losing their homes.
“People are saying, is this a deep crisis or not? If it’s your home, it’s a deep crisis. If you get thrown out of your house, believe me, it’s a major crisis, here” Dodd said.
Charlotte Eby can be reached at 515-243-0138 or firstname.lastname@example.org.