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REP. ELIJAH CUMMINGS (D-MD): Thank you very much, Mr. Chairman.
And Mr. Chairman, thank you for being with us.
I -- many members of Congress now, Chairman, are holding forums in their districts, as I will be doing very shortly, to help people who are coming to our doors literally with tears in their eyes and trying to figure out how they're going to manage a foreclosure that's right around the corner and who have been harmed by this -- what they thought was going to be a dream turning into a nightmare. And you know, as I've sat here and I listened to you, and I -- you know, it seems like you have painted a very rosy picture, but if you came and walked through my district, I think people would be a very -- they would be surprised that you seem so calm.
Let me ask you a broad question on how we make economic decisions. Why did anyone think that the housing market would not suffer tremendous losses, particularly given the extent of sub-prime lending extended to those with poor credit, and also given the obvious risks associated with the increases which could certainly be expected in monthly payments due from -- due those with adjustable rate mortgages and certain nontraditional loan packages? Given the extent of the declines that have occurred, do you think that our markets are adequately regulated?
MR. BERNANKE: Congressman, first, I don't know how you got the impression that I was unconcerned about foreclosures. I'm --
REP. CUMMINGS: I didn't say that you were unconcerned. I just said you seem to be pretty calm about it. And I guess what I'm trying to make sure is that there's a connection -- I know that so often what happens is that when we're making decisions in the suites, we forget about the people who actually have to go through this. But we in Congress -- and I, sitting in the inner city of Baltimore, look at my constituents who are seeing -- who are losing their houses, who are seeing their values go down. They saw -- I think something like 1,200 foreclosures in January; now 7,000 just recently in a month. I mean, things have -- we're becoming a bit alarmed.
And you know I guess I'm just trying to figure out exactly -- exactly how you -- you talked a little bit earlier about efforts on the part of the -- the companies to fix mortgages and whatever, to help people get fixed rates and whatever.
And I just want to know, I want -- I want from you every single thing that you can possibly do to help us help our constituents, because I was just telling Mr. Hinchey on the way over, when a person loses their house, it's not just their loss. It's a family's loss. And their dream, the dream that they thought that they had captured, suddenly disappears out of their hands. And children look at that, and they say, well, gee, you know, I don't know whether I'm going to try trying to buy a house.
But more directly, I don't know when they get back to buying a house. That's the problem. And many of them I'm sure will go a lifetime and never be able to buy a house. And again we're talking about this economy that we want to keep strong and whatever, but what we're also doing that we don't talk about are the people that we are literally taking out of the market.
MR. BERNANKE: Congressman, I spent about half my testimony talking about this problem. I think it's a very serious problem. I think it hurts people; I think it hurts communities. I discussed a number of the actions that companies are taking, and I would urge, first of all, that people in trouble get in contact very early with their servicer or their lender, because the earlier you get in touch the better chance there is to work something out.
I urged the lenders and the servicers to expand their efforts to try to restructure mortgages and help people stay in their homes. I think it's very important. I talked about the Federal Reserve's efforts to try to work with community groups to try and assist that process. And I also talked about our regulatory actions that we're taking to try and make sure it doesn't happen again.
So it is a very important problem, and we spent a lot of time, we've been meeting with people. I met a few days ago with Reverend Jesse Jackson to talk about some of these issues. We have been spending a lot of time on this issue, and we think it's a very very important issue which we are going to do everything we can to ameliorate.
REP. CUMMINGS: Do those efforts on the part of those companies have to be pretty much voluntary?
MR. BERNANKE: We have to try and give them guidance to show them how best to approach this problem. And we think it's in their interests. Because nobody's interest -- if a creditworthy borrower loses their home, that's not in anybody's interest. So we want to try to make sure that they have the flexibility and the leeway that's needed to restructure loans for people who, you know, who should be in a home, who have the credit to be in a home.
REP. CUMMINGS: A little earlier you stated that the patchwork nature of enforcement authority in subprime lending poses a special challenge. Can you discuss what should be done to improve enforcement of provisions intended to protect consumers from subprime loans?
MR. BERNANKE: Well, enforcement is an issue. We are working as I mentioned on a set of regulations that would apply to all lenders. So that would be a new set of rules that would apply to all lenders, including those outside of the federal safety net.
The question is enforcement. The states are typically in charge of overseeing the non-federally regulated lenders. Some of them are very very good at doing that, but we think there's probably more we can do at the Federal Reserve to work with them, to coordinate with them. We have right now going on a pilot program where we are working with other agencies and with the states to try to compare our approaches to supervision and oversight for mortgage lenders to see what we can learn from each other, and to try and increase our coordination with them, to try to make them as effective as possible and try and give us as close a relationship to them as possible.
REP. CUMMINGS: Thank you, Mr. Chairman.
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