We want to make sure that if someone has an idea [and] wants to create a new business, they can get funding. If someone has an existing business and wants to expand, we want to make sure they can find the financing.
The change in capital requirements has hampered financial institutions like BE 100s banks. How do you reconcile new rules so community banks can start lending?
[In] the financial reform legislation Congress passed last year, we were very careful to make sure we protected small banks from the risk that they would be burdened by new regulations that would get in the way of them trying to help their Main Street business customers. I think when you are having financial crisis there is always a risk that supervisors, examiners, regulators who may feel like they weren’t tough enough in the good times, tend to try to overcorrect a little bit after the boom. We’ve tried to make sure examiners are not overdoing it, that after being a little too soft they don’t shift to be too tough and therefore get in the way of helping the economy recover.
What is the status of the consumer protection bureau
and other measures related to financial reform?
The most important thing was to establish in one bureau in the federal government a set of authorities to protect consumers at a national level. We’re now in the process of trying to build up that agency. [Its head] Elizabeth Warren is focused on two important initial things: making sure that we simplify for people who want to buy a house or refinance their house the mortgage disclosure form [so] they can better understand the terms of their loans. She’s also focused on trying to simplify credit card agreements so that, again, consumers find it easier to get better terms and harder to be taken advantage of. This new bureau is going to meet the basic challenge we all have, which is to fix this system that did a very bad job of protecting average Americans.
What are the next steps to curb the
high incidence of foreclosures?
The principal thing that’s driving the rate of foreclosures across the country, and it’s not surprising, is the high levels of unemployment. If someone loses [his or her] job, or your spouse loses his or her job, you’re going to find it hard to meet your monthly payments on your house until you get back to work. Until we get the economy to grow more rapidly and the unemployment rate down more definitively, it is going to be hard to get the housing market back on its feet more quickly. We’re trying to make sure we reach as many Americans as we can and give them a chance to stay in their house. We can’t reach everybody.