"…market discipline has in some cases broken down and the incentives to follow prudent lending procedures have, at times, eroded."

Ben Bernanke comments on the credit woes of the world. He is a master to calm the troubled waters of liquidity.

In recent years, mortgage markets have seen a remarkable wave of financial innovation. The advent of large secondary markets and the use of automated underwriting, for instance, have brought more capital into the system and, in most respects, have helped our mortgage markets function more efficiently while providing wider access to mortgage credit. But some of these innovations also have negative aspects. As the mortgage market has become more segmented and as risk has become more dispersed, market discipline has in some cases broken down and the incentives to follow prudent lending procedures have, at times, eroded. The consequences, as we are currently seeing, can include the proliferation of unfair and deceptive practices that can be devastating to consumers and to communities.