The problems in the subprime mortgage market aren't yet well enough understood for regulators to propose a quick solution, said Cleveland Federal Reserve Bank President Sandra Pianalto.
They are complicated by the speed and breadth of financial innovations, Pianalto told a community development conference in Cleveland, and "I am convinced that there is no single solution or 'silver bullet' that will cure them."
"Within this increasingly complex mortgage market," she said, "policymakers must preserve the benefits of financial innovation while protecting consumers from unfair and abusive practices."
In the fourth quarter of 2006, Ohio had the highest foreclosure rate in the nation. But as Pianalto noted, auto industry and other economic problems probably contributed as much to that as abusive subprime lending.
Pianalto didn't say anything directly about the wider economy or monetary policy. Jeoff Hall of Thomson IFR said: "Her concerns over foreclosures can be construed as dovish, but she seems equally apprehensive about legislation that would attempt to safeguard consumers but end up quashing market forces."
Pianalto does not have an FOMC vote this year.