Second, in order to adjust expectations the necessary measures must be adopted in a credible way. The perception of markets and society must be that the effort is not only serious but that it will be enough to reverse the situation.
Last year, together with other federal banking regulators, we issued guidance concerning so-called nontraditional mortgages. We have also issued draft supervisory guidance concerning underwriting standards and disclosures for subprime mortgages. The agencies are now reviewing the many responses to the draft proposal. The patchwork nature of enforcement authority in subprime lending poses a special challenge.