While the foreclosure mess has been going on for some time, the Federal Reserve has decided to join the fray. The inept Fed Chairman, Ben Bernake feeling pressure from the American people, pretended to take matters seriously. Whenever government fears that the people are sufficiently unhappy about anything they take action. That action is usually wrong and usually makes matters worse in the long run. The Fed wants the populace to believe that they are doing something. But, they can’t leave things alone.
WASHINGTON — Raising pressure on banks, the Federal Reserve is wading into the investigation of whether mortgage lenders cut corners and used flawed documents to foreclose on homes.
Major banks are already under investigation by state officials with subpoena power, who could force them to detail how they handled hundreds of thousands of foreclosure cases.
Federal Reserve Chairman Ben Bernanke added weight to those efforts Monday by saying the central bank would look “intensively” at policies and procedures that might have allowed banks to seize homes improperly.
“We take violation of proper procedures very seriously,” Bernanke said in remarks to a housing-finance conference in Arlington, Va.
Ultimately, though, the mess will probably be settled by the states.
“They can move more quickly than the Fed, and I think they have more leverage over banks to get them to quickly settle,” said Mark Williams, a former bank examiner at the Fed and now a lecturer at Boston University.
Some analysts suggested the Fed is trying to send the message that it’s helping to manage the foreclosure controversy. The central bank shared blame with other federal regulators for failing to head off the 2008 financial crisis.
“The Fed is already late to the crime scene,” Williams said.
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