The Federal Housing Administration might be a better agency for helping subprime borrowers than the government-sponsored enterprises Fannie Mae and Freddie Mac, according to Federal Reserve Board Chairman Ben Bernanke."Congress might wish to consider FHA reforms that allow the agency more flexibility to design new products and to collaborate with the private sector in facilitating the refinancing of creditworthy subprime borrowers facing large resets," Mr. Bernanke says in a letter to Sen. Charles E. Schumer, D-N.Y. The Fed chairman noted that the GSEs' current programs can only help a relatively small share of subprime borrowers. "The GSEs should be encouraged to provide products for subprime borrowers to the extent permitted by their charters," he says. Mr. Bernanke also says the GSEs should be encouraged to "increase their mortgage securitization efforts, which are not constrained by their portfolio caps."

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