WASHINGTON – The smooth flow of credit is "essential for a healthy economy," Federal Reserve Chairman Ben Bernanke said Thursday, amid continuing concerns about the impact of risky mortgage loans on the economy.
Bernanke, in brief remarks to a Federal Reserve conference, didn't talk about the economy, interest rates or problems with risky mortgages, per se.
But he did say, "Credit risk is a very important topic."
The Fed chief's remarks come amid recent turmoil on Wall Street about mounting troubles for lenders who made mortgages to people with blemished credit histories. Delinquencies and foreclosures for such risky mortgages are spiking, rattling investors and politicians.
Smoothly functioning credit markets are good for the economy because they support spending and investment by consumers and businesses alike. That helps to bolster economic growth. A credit crunch can have the opposite impact.
Bernanke and his colleagues on Wednesday held a key interest rate steady for the sixth meeting in a row, extending a breather for U.S. borrowers.
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