Fed chief calls for tougher lending laws

WASHINGTON, Sept. 20 (UPI) -- Federal Reserve Chairman Ben Bernanke Thursday called for tougher restrictions on what borrowers and lenders can do.

Bernanke told the House Financial Services Committee in Washington that in light of the growing turmoil from increasingly permissive subprime lending, a full review of consumer protection regulations was underway, the New York Times reported.

He said the number of loan delinquencies and foreclosure initiations “are likely to rise further.”

The Fed chief said that 15 percent of subprime loans were seriously delinquent in July -- 90 days or more in arrears -- triple the level of two years ago.

“The recent problems in subprime lending have underscored the need not only for better disclosure and new rules but also for more-uniform enforcement in the fragmented market structure of brokers and lenders,” he said.

Bernanke said the Federal Open Market Committee "will act as needed to foster price stability and sustainable economic growth."

The FOMC on Tuesday cut the funds rate by a half percentage point to 4.75 percent, double what most economists had expected.