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Bernanke Says Interest Rates Not to Blame for Housing Bubble

Posted by: RateAPY Bank Rates News
January 5th, 2010

In a speech over the weekend, Federal Reserve Chairman Ben Bernanke stated that the housing crisis was caused by poor regulation of banks and not low interest rates. It was the exotic mortgage products and real estate speculation that created the bubble that ultimately popped and brought down U.S. housing. Bernanke is defending himself and former Fed Chairman Alan Greenspan for their loose monetary stances.

Bernanke has been under fire for the Fed’s role in the housing crisis. Senator Chris Dodd, among others, is considering stripping the Federal Reserve of its role as regulator of banks. Senator Dodd thinks that perhaps a separate regulating body would be better able to prevent another crisis in the future. The Federal Reserve’s role would be limited to designing and implementing monetary policy.

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