Fed tightens lending standards

The Federal Reserve Board will consider new regulations to tighten mortgage-lending standards, said Chairman Ben Bernanke in a letter released Friday. “With respect to the recent problems in the subprime mortgage market, the Board plans to consider how it might further use its rulemaking authority to address particular lending practices,” Mr. Bernanke wrote in his letter to Senate Banking Committee Chairman Christopher Dodd. In the past, Senator Dodd of Connecticut has criticized the Fed’s job at protecting borrowers from predatory lending. Tighter regulations should not hurt borrowers involved in proper lending transactions, Mr. Bernanke noted. “Loan terms that may be harmful to some borrowers may provide benefits in other transactions,” he wrote. “Any rules should be tailored to avoid the unintended and undesirable consequence of limiting credit availability in legitimate transactions.” The Fed will hold a public hearing in Washington on June 14 to discuss these issues.