Fed Cracks Down on Loose Lending

Unanimous vote marks historic shift toward regulation
By Nick McMaster,  Newser Staff
Posted Dec 18, 2007 7:43 PM CST
Chairman of the Federal Reserve Ben Bernanke, right, delivers his opening remarks as Housing and Urban Development Secretary Alphonso Jackson, center, and Treasury Secretary Henry Paulson, Jr., left,...   (Associated Press)
camera-icon View 2 more images

(Newser) – Seeking to avoid another subprime meltown, the Federal Reserve cracked down on mortgage lending today by a unanimous 5-0 vote, the Wall Street Journal reports. If approved next year, the Fed proposals will require creditors to consider borrowers' financial and credit status, but will not prohibit prepayment penalties altogether, a move sought by some consumer groups.

"Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities," Fed Chairman Ben Bernanke said before voting. "They have no place in our mortgage system." House lawmakers also helped borrowers today, passing a bill to let homeowners dodge a tax on forgiven debt when restructuring mortgages. Bush has vowed to sign a Senate-approved version of the bill, the New York Times reports.