US Must Stop Foreclosures, Bernanke Warns

He warns of cascading crisis
By Peter Fearon,  Newser Staff
Posted May 6, 2008 2:35 AM CDT
Federal Reserve Chairman Ben Bernanke is calling for government action to halt foreclosures on home mortgages.   (AP Photo)
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(Newser) – Federal Reserve Chairman Ben Bernanke yesterday called for government intervention to halt home foreclosures, warning that to do nothing could "destabilize communities, reduce property values of nearby homes, and lower tax revenues." Bernanke said in a speech in New York that a million Americans were already three months behind in mortgage payments at the beginning of this year, threatening dire consequences for the future of the economy, reports the Los Angeles Times.

"High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy," said Bernanke, urging government intervention and cuts in loan repayment requirements. "Doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers—it's in everybody's interest."