Ben Bernanke reported to Congress that he expects turmoil in the housing and mortgage markets to continue through 2009 and has asked Congress for increased Federal Reserve powers to help address the market problems.
They’re still overly optimistic. The plain fact is that Option ARM resets are going to start crashing on the shores of the housing market with grave effect. Unless the government decides to offer wholesale debt forgiveness and cheap refinancing options to these note holders were going to be in for a lot of pain through 2012.
From the New York Times:
Ben S. Bernanke, the chairman of the Federal Reserve, publicly indicated on Tuesday that he believes the problems will persist into next year when he outlined a series of steps the Fed is considering in the coming months.
One such step would extend low-interest lending programs to Wall Street’s largest investment banks into next year. The programs, one of which was set to expire in September, can continue only if the Fed issues a finding that there are “unusual and exigent circumstances” that justify them.
Mr. Bernanke also recommended that Congress grant the Fed broader authority to monitor and supervise the financial markets to assure greater stability in the future. But with time running out on this session, lawmakers are unlikely to adopt such legislation before next year.
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