"Data show there could be a second wave of the more traditional credit stress you see in an economic slowdown," Bair said.
"The slowdown we've seen in the U.S. economy since late last year appears to be directly linked to the housing crisis and the self-reinforcing cycle of defaults and foreclosures, putting more downward pressure on the housing market and leading to yet more defaults and foreclosures."
Bair lauded efforts by Democrats and some Republicans in Congress to draft a bill offering federal mortgage assistance but said "more proactive intervention" is needed to prevent home foreclosures.
Bair called for using low-cost government loans to help borrowers pay down unaffordable mortgages, a plan she put forward last month as a way to help about 1 million homeowners.
"Over the past year, federal and state governments, and consumer groups have worked with some success to encourage the industry to modify loans," Bair said.
"But it's just not happening fast enough.
Given the scale of the problem, this cannot go on loan-by-loan as it has." The FDIC insures deposits at more than 8,000 U.S. banks and thrifts and oversees the soundness of the institutions.
Earlier on Friday, the Commerce Department reported construction starts on new U.S. homes rose by a surprisingly strong 8.2 percent in April and applications for new building permits turned up for the first time in five months.
New-home building has been hit hard by a wave of foreclosures for existing homes and big inventories of unsold homes.
Democrats and Republicans on the Senate Banking Committee on Thursday reached a deal for a broad housing rescue plan that would offer $300 billion in refinancing for distressed mortgages, according to housing industry sources.