Fed's Kroszner Says Fed Rules Will Affect Subprime and Alternative Mortgages

Delivering comments at the FDIC's Minority Depository Institutions National Conference in Chicago, Fed Governor Randall Kroszner said the Fed's new rules on mortgages would alleviate pressures in nearly the entire subprime sector and some other alternative mortgage markets.

"At the core of our program, we have implemented a series of web-based modules designed to assist banks in addressing three distinctive development stages: (1) starting a bank, (2) managing its transition from a start-up to an established bank, and (3) building shareholder value once a bank has been established on a sound footing," Kroszner said.

The Fed governor made no comments on U.S. monetary policy in his remarks, rather spending time on explaining various recommendations made by the Fed aimed at alleviating pressures in the U.S. mortgage markets. He also promised the Fed would continue to work very closely with the authorities to come up with new ways to correct the situation.

By Erik Kevin Franco and edited by Nancy Girgis