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Archive for Tuesday, September 27, 2005

Fed chair: Equity would cushion drop

September 27, 2005

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While the high-flying housing market still holds risks, especially for the financially stretched, most homeowners are in a fairly good position to weather a shock if prices drop, Federal Reserve Chairman Alan Greenspan said Monday.

"The vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices," he said in remarks delivered via satellite to a banking conference in Palm Desert, Calif.

Still, Greenspan also made clear that there are several factors - risky mortgages and speculative activity in particular - that warrant scrutiny.

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