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Learning English - Words in the News
21 September, 2007 - Published 13:06 GMT
Fed to stop bad lending practices
Fed has cut interest rate to 4.75%
Source: US Federal Reserve

Thousands of Americans have lost their homes and lenders have been forced out of business in the US mortgage crisis. The Chairman of the Federal Reserve, Ben Bernanke, says actions are needed to stop repossessions and prevent an economic recession. This report from Vanessa Heaney:

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With repossessions at a record high and late mortgage payments continuing to soar across the United States, the Federal Reserve Chairman, Ben Bernanke, warned that the situation would get worse, as many borrowers face their first interest rate adjustments. He said thousands of homeowners would be unable to make their increased mortgage payments and were expected to default.

But he offered his assurances that regulators would take steps to curb the economic fallout related to the mortgage crisis. Testifying before Congress, he promised that the Federal Reserve would also crack down on abusive, or bad lending practices.

The US treasury Secretary, Henry Paulson, said that mortgage documents would be simplified, to prevent important information getting buried in the complicated small print.

These comments come two days after the Federal Reserve cut interest rates, to assist the ailing US housing market and prevent the world's biggest economy from falling into recession.

Vanessa Heaney, BBC News, Washington

Listen to the words

when banks or other mortgage lenders take back the homes of people who can't afford to make their mortgage repayments

face their first interest rate adjustments
have to begin to deal with changes in interest rates (some two million Americans will have to make bigger repayments in the next year as their original much lower rates come to an end)

expected to default
believed to be unable to repay their mortgages

offered his assurances
promised with confidence

take steps
act, do something, take measures

curb the economic fallout
lessen the negative effect of the mortgage crisis on the economy

crack down on
start dealing more severely with (something bad)

buried in the complicated small print
hidden in the details of a document which are printed smaller than the rest of the text (sometimes in the hope that they will not be noticed because they contain information that will be disadvantageous to the person signing the document)

in a bad condition or state

falling into recession
entering a period when the economy is slow and conditions for business are bad

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