"...The problems that led to the mortgage crisis and the potential policy solutions to those problems are numerous and varied. Even though time does not permit a full discussion of them here, I do believe that forceful and effective housing policies have the potential to significantly influence the speed and strength of our economic recovery. The Federal Reserve has already acted to reduce mortgage rates by purchasing longer-term assets, in particular through the purchase of agency mortgage-backed securities. Indeed, low rates combined with falling house prices have contributed to historically high levels of housing affordability. At the same time, rents have been rising, which should make homeownership a more attractive option relative to rental housing..."

"....Against that backdrop, I appreciate the opportunity to speak at the First Friday Economic Outlook, at the start of a promising new year, and share my thoughts with you on two vitally important topics: how the Federal Reserve's monetary policy aims to increase the availability of credit to foster economic growth, and how we are tailoring our examination and supervision of community banks to ensure that we are not inadvertently constraining lending..."