Media Overreacting to Subprime Situation?

The news media have "overreacted" to the correction in the subprime market, and the mortgage market will settle down soon, according to a top official of the Department of Housing and Urban Development."Some of the concerns are justified because of the cooling in the housing market," HUD Deputy Secretary Roy Bernardi told the National Association of Mortgage Brokers. He stressed that the housing boom was unsustainable and that no one should be surprised by the adjustment or by the fact that subprime loans are risky. "I believe this cooling-off period will be a short-term adjustment, and it will eventually be healthy for our economy," Mr. Bernardi said. Sen. Mike Crapo, R-Idaho, told the brokers that market discipline is working but that some regulation is needed so the adjustment will not be so "severe" in the future. But the banking committee member stressed the need for a balanced approach. "We need to be careful that we don't create a disincentive to provide financial credit to those who have less than a perfect credit history," Sen. Crapo said. The NAMB can be found on the Web at http://www.namb.org.