Fed's Lacker Says Broader Access To Credit Has Risks
Richmond Federal Reserve Bank President Jeffrey Lacker said on Thursday it was hard to know when restricting access to credit to protect some borrowers was worth choking off credit to others.
Lacker, opening a Fed-sponsored conference on community development, broadly addressed the heightened climate in Washington for action to address the pain being felt byborrowers in the subprime mortgage market who have now found they cannot afford their homes.
"If, as is sometimes the case, such measures restrict the availability of credit to borrowers who would not have suffered adverse outcomes, then one faces a trade-off. Does the benefit of preventing adverse outcomes for some outweigh the cost of restricting beneficial credit to others?," Lacker said. "We would do well to recognize the limit to our ability of make such judgments."
He did not comment on the outlook for the U.S. economy or Fed policy in his remarks.