In a speech held Friday at the central bank’s community affairs conference in Washington, Fed Chairman Ben Bernanke said that the collapse of U.S. lending will probably cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.
From Bloomberg: “One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be,” the Fed chair said. “The damage from this turn in the credit cycle — in terms of lost wealth, lost homes, and blemished credit histories — is likely to be long-lasting.”
“Something went wrong,” Bernanke said. “We have come almost full circle with credit availability increasingly restricted for low- and moderate-income borrowers.”
Bernanke didn’t discuss during his speech the outlook for the economy. Central bankers’ next meeting is scheduled April 28-29.