Federal Reserve Board Chairman Alan Greenspan said Wednesday that his agency will not enforce Community Reinvestment Act deals struck between banks and activists.
Testifying before the Housing Banking Committee's domestic and international policy subcommittee, Mr. Greenspan instead urged community leaders to include monitoring and enforcement mechanisms in CRA agreements.
"I suspect you'll find in most instances that (banks) do what they say they will do," he said.
Mr. Greenspan was on Capitol Hill to present his semiannual report to Congress on the economy. Overall, he predicted continued growth, low inflation, and high employment, though he warned that the Fed would raise rates at the first sign of inflation. "The most likely scenario is more of what we have seen," he said. He made similar comments Tuesday to the Senate Banking Committee.
The Fed chairman also urged Congress to use the budget surplus to pay down the national debt rather than to finance tax cuts or new spending. He also said lawmakers should approve $18 billion for the International Monetary Fund before they recess for the November elections. Recapitalizing the IMF would be an insurance policy to prevent foreign economic crises from spreading to the United States, he said.