Not really that severe, but sort of.

Federal Reserve Chair Ben Bernanke asked Congress Thursday to limit its response to the mortgage crisis, saying that federal agencies are handling it.

“We are responding to the subprime problems on a number of fronts,” Bernanke said in testifying before the House Financial Services Committee. “We are committed to preventing problems from recurring, while still preserving responsible subprime lending.”

Bernanke said some legislative action may be OK but Congress should tread cautiously. He recommended only expanding Fannie Mae and Freddie Mac temporarily “if at all” and urged that federal regulator, the Office of Federal Housing Enterprise Oversight, make the changes. He suggested that any congressional action should focus only on the Federal Housing Administration.

Rep. Barney Frank (D-Mass.), chairman of the panel, didn’t think that was enough. He repeatedly argued that tighter regulation could have averted the mortgage crisis.

And, so what did Representative Frank propose?

Raising the FHA lending limits, allowing zero percent down loans, and helping subprime loan borrowers the chance to refinance into other loans (which many will then default on, again).

So, something worse.

Source: Fed Chair to Congress: Stay Out of the Mortgage Crisis – By Sean Higgins, Investor’s Business Daily, by way of

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