(CEP News) - Federal Reserve Chairman Ben Bernanke said Friday that the current credit crisis could have long-lasting effects, and represents a “misfire” of financial innovation. He criticized credit securitization, which he said is to blame for the current meltdown.

In a speech delivered in Washington, D.C. Bernanke spoke out against complex or dangerous credit products, and said they need to be regulated in order to protect consumers.

He did not discuss the U.S. economy directly in his speech.

Bernanke said credit products that are too complex need to be regarded with suspicion and will probably be regulated going forward.

He said that when complexity in a financial product leads to lack of transparency, it prevents competitions and prompts consumers to make poor choices. He also blamed complex credit securities for the decline in underwriting standards.

By Megan Ainscow, mainscow@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca

CEP Newswires - CEP News © 2009. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.

Posted in Categories: Economy, Releases, USA.

Subscribe by RSS Subscribe by Email