WASHINGTON - flatly opposed legislation transferring to the central bank responsibility for the real estate settlement law. Parts of the Real Estate Settlement Procedures Act are in essence price controls, he said. "This is foreign to the board's central bank responsibilities," he said. Also, he said the Fed "lacks the experience" to administer the law, which Congress passed to prevent bankers, attorneys, and real estate agents from giving each other referral fees. Measures are pending in both the House and Senate to transfer the program. But, Mr. Greenspan said that simply moving it from the Department of Housing and Urban Development will not make it work better. Instead, he said, Congress should hold separate hearings to reevaluate the act, which is known as Respa. "There are very complex issues raised by Respa that need to be addressed separately, rather than as part of the general efforts to improve efficiency and reduce the costs of governmental regulation," he said. "Separate hearings could focus on the substance of Respa rather than administrative jurisdiction," he added. Mr. Greenspan, in a wide-ranging speech, urged the real estate industry to participate in legislative reviews of the Federal Housing Administration. He also said the Fed's recent interest rate moves were needed to maintain economic stability. "History is replete with examples of a general principle, namely that excesses lead to problems," he said. "Boom-and-bust cycles are no friend of real estate professionals or your customers." Consumers are not willing to buy a house unless they are confident they will retain their jobs and that the value of the home will not decline, he said. "It is hard to overestimate the importance of house price trends for consumer psyches," he said Changes in home prices affect individual wealth, he said, adding that the $4 trillion in housing equity equals $65,000 per homeowner. To maintain stability, the government needs a sound fiscal policy. This, he said, is why he is "encouraged" by the renewed attention on deficit cutting. "Important steps have been taken" toward reducing the deficit, he said of reducing the deficit. "But, it is essential that the momentum toward reducing, and eventually eliminating, the deficit be accelerated." He also said the country cannot count on the rest of the world to finance internal investments. "Nations ultimately must rely on their domestic savings to support domestic investment," he said.
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