Planet Realtor News Item

Planet Realtor News Item: "NEW YORK -- July 20, 2005 -- The Federal Reserve won't use monetary or regulatory policy to cool housing prices and prevent the popping of what some commentators say is a housing bubble, Fed Chairman Alan Greenspan told Rep. Jim Saxton (R-N.J.) in a letter.

'The regulatory system is not designed to influence or control asset bubbles, but rather to ensure that bubbles, should they develop, do not lead to unsafe lending practices,' Greenspan says in the letter.

Saxton, chair of the Joint Economic Committee of Congress, questioned whether recent guidance about risky mortgage products could be considered 'regulatory suasion' and an alternative to higher interest rates as a means of tightening control of the market.

Greenspan says no. Only signs 'that some banks were not appropriately managing risks in the home-equity area' triggered the Fed to offer a warning to lenders about interest-only home-equity loans."