Sunday, March 16, 2008

Finance chiefs urge mortgage market revamp

WASHINGTON: America's top financial chiefs yesterday urged mortgage firms, credit rating agencies and banks to overhaul their practices as a spreading credit crunch rocks Wall Street and the US economy.

US Treasury secretary Henry Paulson, Federal Reserve chairman Ben Bernanke and Securities and Exchange Commission chairman Christopher Cox endorsed a set of recommendations aimed at boosting business transparency and risk management.

Paulson said the President's Working Group on Financial Markets wanted mortgage firms, credit rating agencies and banks to reform their business practices to avert liquidity crunch.

Among numerous recommendations backed by the panel was a call for federal and state regulators to strengthen oversight of mortgage lenders.

Meanwhile, US consumers cut spending last month and the labour market continued to weaken, suggesting the household-spending pillar that had supported the economy's expansion may be giving way.

Retail sales unexpectedly plunged 0.6 per cent, while the ranks of workers remaining on state unemployment benefit rolls hit the highest level in nearly 2-1/2 years.